BELGRADE: Poland's zloty firmed slightly on Friday afternoon after the central bank chief said the currency was slightly undervalued, providing a boost to central and eastern Europe's largest economy.
Asked by reporters if he saw the zloty as slightly undervalued, Marek Belka said: "Yes."
"It is a stimulus for the economy," he added.
The zloty, which hit 15-month lows against the dollar on Thursday, was bid at 3.3273 to the dollar by 0138 GMT, compared with 3.3424 at the opening on Friday. Thursday's 15-month low was 3.3598.
Central and Eastern European currencies were stable against the euro, which gained support from data showing euro zone business growth has picked up unexpectedly this month.
Markets will be watching a meeting in Warsaw where David Lipton, the first deputy director at the International Monetary Fund, is meeting the central bank governors of Poland, Romania, Slovenia and Croatia, among others, on Friday.
In Poland, minutes of the central bank's October meeting released on Thursday said a majority of the bank's Monetary Policy Council thought further cuts in interest rates "should be rather quick and significant".
But on Friday Bloomberg quoted central bank rate-setter Jerzy Hausner as saying the main interest rate is at an appropriate level after a 50 basis points cut earlier this month, and it should now be kept steady.
Poland cut interest rates 50 basis points this month, more than expected. The central bank policymakers also signalled more cuts are likely as the euro zone's slump and the Ukraine crisis constrain economic growth.
"The idea of upfront cuts suggests a more than even chance of 25 bps rate cut on Nov. 5. We think such a move will be largely market neutral (within range of priced-in outcomes)," Commerzbank said in a daily note.
The diverging outlook for monetary policy in the United States, where it is expected to tighten in 2015, compared with much of Europe, where looser monetary policy is likely, have pushed the dollar up against the zloty and its regional peers.
The zloty has lost more than 9 percent against the dollar since early July. Hungary's forint lost about 7 percent in the same period, the Czech crown 9 percent and the Romanian leu about 8 percent.
In Serbia, the dinar hovered around two-year lows. Parliament is expected to vote on Sunday on a revised 2014 budget that will include cuts in public-sector wages and pensions.
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