BUDAPEST: The zloty and the Czech crown extended their gains on Wednesday before a batch of Polish economic figures which are expected to show continued robust economic growth in the region.
The crown, which firmed 0.2 percent to 25.73 by 1032 GMT, was also boosted by expectations that the Czech central bank will increase interest rates further.
Out of the bonds offered by the Czech government at its auction on Wednesday, it did not sell zero-coupon papers at all, "With CNB hikes looming people are not interested in short bonds at these levels," a dealer said.
The crown shrugged off concerns that the likely election victory of ANO party at Czech elections over the weekend could lead to drawn-out coalition talks, Goldman Sachs said in a note.
"Domestic financial markets are typically resilient to Czech political events, given the Czech Republic's strong fiscal position, sound institutions and independent central bank," it added.
Polish and Czech current account data released this week and recent government budget figures have confirmed that most of the region's main economies remain well-balanced, analysts said.
The Polish figures due at 1200 GMT are expected to show strong industrial output and retail sales growth in September.
The zloty firmed 0.1 percent to 4.2312 against the euro, though it was slightly off Tuesday's three-month highs.
Polish government bonds eased, reflecting losses in euro zone markets, as investors awaited the figures which, if strong, could fuel expectations of Polish central bank policy tightening next year.
"The long end might be particularly sensitive," BZ WBK analysts said in a note.
Central bank policies have been diverging in the region in the past months.
The Czechs, with the lowest inflation target, started to lift interest rates in August, while the Hungarian bank has eased further.
The forint still reached 5-week highs versus the euro this week, trading on the firm side of the key psychological line of 310.
"Moody's could lift the outlook of Hungary's debt rating (in its review) to positive on Friday, and based on Hungarian economic indicators, an upgrade cannot be ruled out either," one Budapest-based fixed income trader said.
Regional central bankers also European Central Bank rate setters and any hawkish guidance from the ECB's Oct 26 meeting could reduce appreciation pressure on regional currencies.
Comments
Comments are closed for this article.