BUDAPEST: The zloty hit a 15-week high against the euro on Wednesday, extending gains following a plan announced on Tuesday to tackle mortgages denominated in other currencies hit banks by less than feared.
The zloty traded at 4.3105 at 1409 GMT, off its 4.307 high, but firmer by 0.4 percent from Tuesday.
The forint firmed 0.1 percent versus the euro, but touched a 10-week low against the zloty.
Some analysts recommended channelling funds into the zloty from the forint as the long-awaited Polish bill aimed at tackling the problem of Swiss franc mortgages means lower costs to banks than feared.
The exact costs of the scheme to banks are still uncertain but the costs will be less than feared, analysts said, but the plan cuts the risk that credit rating agencies downgrade Poland. A conflict with Brussels over the rule of law in Poland is a seen as a further risk to the sovereign rating.
The zloty and the forint are expected to relinquish some of their recent gains in the coming months, but Central Europe's continuing economic growth could help them to firm again next year, a Reuters poll of analysts showed.
The yield on Poland's 10-year government bonds touched a 9-month low at 2.72 percent, while Hungary's corresponding yield was fixed at 2.92 percent, up 9 basis points.
"But market turnover is thin today so I do not think this is a flow of funds from Hungarian bonds into Poland," one Budapest-based fixed income trader said.
Bank shares in the region struggled on Tuesday, but some Polish banks extended their gains. PKO BP rose 2.1 percent and traded near 4-month highs.
The shares of Pekao, which did not take part in Swiss franc mortgage lending, shed 2.5 percent even though Poland's No. 2 lender reported a 12 percent rise year-on-year in second-quarter net profit, beating forecasts.
Its Italian owner, UniCredit said after reporting a surprise fall in its capital that it would assess all options concerning its stake in Pekao.
Czech Komercni Banka plunged more than 10 percent after it pulled back from a policy of paying elevated dividends as it has done in previous years after a change in capital requirements.
Shares in Hungary's OTP fell 1.7 percent, but Romania's biggest listed lender, BRD Groupe Societe Generale bucked the trend, with its shares rising by 0.7 percent after the bank reported a 65 percent annual rise in the first half.
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