BUCHAREST: The Polish zloty hit a fresh four-month high against the euro, lifted by expectations that the central bank will decide not to cut interest rates later on Wednesday, while other currencies in central Europe were mostly flat.
Poland's central bank had said only a deteriorating growth outlook for the region's biggest economy would prompt further monetary easing, signalling it would look beyond falling consumer prices.
Poland's benchmark interest rate now stands at 2.00 percent, compared with the euro zone's 0.05 percent. Analysts polled last week expected Poland to keep rates unchanged throughout 2015.
"The National Bank of Poland has signalled this outcome well in advance, hence (the decision) is likely to prove market-neutral, with a slight bias towards a stronger zloty (if rates are left unchanged) as there are likely to be at least some rate cut bets among market participants in the present ECB environment," Commerzbank said.
By 0910 GMT, the zloty traded at 4.156 to the euro and the forint at 306.69 per euro, both up 0.3 percent on the day. The Romanian leu, the Czech crown and the Serbian dinar were flat.
Hungarian players are closely watching Poland's rate
decision, which should preserve the Polish yield advantage over the euro zone, as it might affect Hungarian rate expectations.
"The Polish rate meeting is in focus today.
There is a small chance of a rate cut but I think a shift towards a more dovish rhetoric is possible, also in light of the concerns over Russia," said a Budapest-based trader, referring to the impact on Poland of sanctions imposed on Russia in the Ukraine crisis.
Official data showed Hungary's and Romania's economies expanded by 3.2 percent on the year in the third quarter, confirming preliminary released data.
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