The forecast for emerging currencies is grim. With one exception

The winds appear to be changing for the battered Polish zloty.

After an inauspicious start to 2019 that left it wallowing behind only the Romanian leu and the Argentine peso as the biggest loser versus the euro in emerging markets this year, the zloty is being tipped as the one currency likely to rise in the second quarter.

The Polish currency has been beaten down by a row with the European Union over the rule of law and almost four years of record-low interest rates, but PKO BP analyst Joanna Bachert says a rebound is in order because of the nation’s potential to resist a broader EU growth slowdown.

The zloty will strengthen 0.5% between now and the end of the second quarter against the euro, according to data compiled by Bloomberg. The next-best performer will be the Romanian leu, with a 0.4% loss. The zloty was little changed on Tuesday at 4.3318, a 1.1% drop so far this year.

A slew of data this week could give impetus to a change in direction for the zloty, with growth in wages, industrial output and retail sales forecast to accelerate year-on-year. Bachert sees the zloty ending the first quarter almost 1% stronger at 4.29 per euro before gaining a further 0.5% by the end of the first half.

“We expect the data to confirm the local economy’s resilience to Europe’s slowdown,” Bachert said in an emailed note. Dovish signs in US Federal Reserve minutes this week will “raise appetite for emerging-market currencies, including the zloty,” she said.

© 2019 Bloomberg L.P