Polish zloty gains on euro debate plans

WARSAW: The Polish zloty gained sharply in early trade on Monday, underpinned by the prime minister's announcement that he planned to launch an official debate soon on the country's euro adoption prospects.

Prime Minister Donald Tusk said the debate would start later in February and his Finance Minister Jacek also said Poland should soon define when approximately and how it should adopt the single currency.

"PM Tusk announced on Friday that a debate about Poland's euro adoption will start on February 19. In response, the zloty began to gain against the single currency," Bank Zachodni WBK wrote in a note to clients.

By 0810 GMT the zloty was 0.7 percent stronger against the euro. The Hungarian forint and the Czech crown were about 0.1 percent stronger each.

"(This morning) shows that the zloty is still being positively affected by the Friday's announcement about the euro entry debate."

The zloty could come under renewed pressure this week, however, because of the expected interest rate cut.

The central bank's 10 rate-setters are due to announce their monthly decision on borrowing costs on Wednesday and analysts expect them to reduce rates by 25 basis points to 3.75 percent.

The move would be the fourth interest rate cut since the start of the monetary policy easing campaign in November aimed at helping the economy, which has slowed to its weakest level in three years in 2012

Hungary's forint, which was also a touch firmer early in the session, and investors awaited the conclusion of the government's non-deal bond road-show in Europe and the US

Many expect Budapest to come out of this road-show with its first international bond issuance since May 2011, possibly as soon as this week.

"The gains continue this morning but all eyes are on the coming FX bond issuance," said one Budapest-based dealer.

"This positive sentiment may persist throughout the week... the goal is to win over investors."