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ING: Duda’s veto is a ‘clear positive’ for zloty, but risks remain

Polish president Andrzej Duda’s decision to veto two radical reforms of the judiciary is a “clear positive” for the zloty, according to analysts at ING, but the currency should continue to trade with a “persistent, yet modest” risk premium.

The proposals, which have drawn fierce criticism from the EU and sparked protests, were blocked by Mr Duda on Monday, and Petr Krpata, head of EMEA currencies at ING, said the short-term risk to the zloty had “materially decreased” following the decision.

“The surprise President Duda veto of two out of three judiciary revamp proposed bills is a clear positive for the zloty following the political uncertainty led sell-off late last week,” he said. “Given the veto, this means that the PiS now needs a 3/5 majority in Parliament to overrule the decision. This is unlikely given the current division of votes. This means that either a new bill will have to be proposed (the most likely option) or no bill.”

At pixel time, the zloty is trading up 0.6 per cent against the euro at PLN4.24.