WARSAW: The zloty rose to a four-month high against the euro on Tuesday amid expectations Poland will leave interest rates unchanged on Wednesday, preserving its yield advantage over the euro zone's currency.
Other central and eastern European currencies were mostly stable. Shares of Hungarian oil company MOL gained on reports it had been paid for oil from Iraqi Kurdistan.
By 0944 GMT, the zloty traded at 4.162 to the euro, up 0.4 percent on the day, with turnover high. Yield on Polish 10-year bonds fell to 2.44 percent.
Dealers said the zloty was lifted by foreign demand after stronger-than-expected data reduced the likelihood of more interest rate cuts in the region's biggest economy.
"After good third-quarter GDP data and yesterday's clearly better-than-expected PMI, the sentiment on the zloty has improved because the risk of cuts fell," said a Warsaw-based trader.
Tuesday data showed Polish factory activity growing at its fastest pace in eight months in November, confounding expectations it would slow.
Poland's central bank has said that only a deteriorating outlook for economic growth would prompt more monetary easing, signalling it would look beyond falling consumer prices. Analysts polled last week expected Poland to keep interest rates unchanged throughout 2015.
By contrast, expectations are the ECB might introduce more monetary measures to stimulate the euro zone economy when it meets on Thursday, giving the Polish currency a further advantage. Poland's benchmark rate now stands at 2.00 percent, compared with the euro zone's 0.05 percent.
In addition, Polish consumer prices fell by an annual 0.6 percent in November, while the euro zone's rose 0.3 percent. That means investors buying zlotys could expect higher inflation-adjusted returns than they would get from the difference in rates alone.
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