Currencies firm on benign economic growth readings

BUCHAREST: Central European currencies edged up in early session on Friday after a bout of positive economic data showing higher-than-expected economic growth and a confirmation that Romania was not undergoing temporary recession earlier this year.

The forint firmed to a fresh four-week high, gaining 0.1 percent to 305.2 per euro and the Romanian leu edged up 0.1 percent to 4.42. the Polish zloty also firmed 0.1 percent to 4.23 per euro.

Hungary's economy grew by an annual 3.2 percent in the third quarter based on preliminary unadjusted data, the Central Statistics Office (KSH) said on Friday. Analysts polled by Reuters had forecast a 3 percent rise.

In neighbouring Romania, data showed the emerging economy economy growing by 3.2 percent in July-September, sharply above expectations, while revised data showed the country was not in recession earlier this year.

Poland's gross domestic product growth was 3.3 percent year-on-year against 3.5 in the previous quarter, but beating market expectations of an annual 2.8 percent growth.

"We're expecting the technical recession (in Romania) to be declared void but the dynamics for the third quarter were much stronger than expected," said Mihai Patrulescu of UniCredit.

Analysts said the Romanian numbers were influenced by a change in methodology to comply with some EU norms and with industry, construction and agriculture being the main drivers. "The large scale of revisions and that previously-reported so called 'technical recession,' will be revised away are two factors which may limit the bullish price action in the leu markets," said Vlad Muscalu of ING Bank in Bucharest.

A Budapest dealer said growth figures contributed to the good sentiment which started earlier: "(Prime Minister Viktor) Orban, indicated though, today the (forint) exchange rate may not be as good as now in the coming period."

"I expect a strong level, though, until the end of the year. The levels at 305-305.50 provide quite strong resistance, but if it is broken, the forint could strengthen even further."