WARSAW/BUCHAREST: Emerging European currencies traded near recent highs on Thursday, tracking euro gains against the dollar after first quarter US economic growth came in weaker than expected.
Earlier, the Federal Reserve's reiteration of its ultra-dovish stance kept investor appetite healthy for higher yielding assets.
Hungary's forint traded close to a one-year high against the euro, hitting 262.70 earlier in the session, and reached a 17-month high versus the dollar before giving up some ground as traders booked profits.
The Polish zloty slipped slightly as importers took advantage of a surge to a 30-month high against the dollar to buy the US currency and sparked a wider bout of profit taking.
The Federal Reserve's policy committee decided to keep rates on hold near zero on Wednesday and stuck to its plans to maintain its $600 billion bond buying programme through June.
The move indicated the market would be flush with cheap liquidity for some time to come. It lifted stocks globally, hit US debt, and drove the dollar to a 17-month low versus the euro.
"It's the end of the month, London is closed tomorrow -- some people thought the (forint) levels firmer than 264 are already favourable to take profit, that's what I suppose," one Budapest-based currency dealer said. "The same happened to the zloty."
A fixed income dealer said investors focused on Fed Chairman Ben Bernanke's comments in early trade which suggested continued cheap cash supply to global markets, but followed the forint later to weaker levels in very thin trade.
On Friday and Monday London's financial markets -- home to many of the biggest offshore investors in emerging Europe -- are closed, which a dealer said would probably keep trade light.
LEU EDGES AWAY FROM HIGHS
Romania's leu fell 0.2 percent to 4.076 per euro, easing away from a one-year high hit in early trade after failing to make a definitive break through resistance at about 4.07.
The leu has gained nearly 4 percent so far this year as Romania's economy has started to gain traction after a deep recession and fiscal reforms take effect, and some analysts expect it could reach 3.95 per euro.
An International Monetary Fund team started a review of Romania's new two-year aid deal on Wednesday, which will continue through May 9 and is widely expected to note progress in meeting fiscal deficit targets.
"We see further appreciation for RON," one dealer said, adding that if the leu broke through 4.07 its next resistance would be at about 4.05 per euro, the highest level it reached in 2010.
The Czech crown was a touch lower.
The zloty shed 0.1 percent on the day, though remained close to the two-month high hit on Wednesday after the Finance Ministry said it would start exchanging European Union funds on the spot market this quarter, while bond yields were little changed.
"Without the ministry actually selling euros on the market it will be hard for the EUR/PLN to reach levels below 3.90," ING Bank Slaski said in a note.
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