BUDAPEST/WARSAW: The zloty hit a six-week high against the euro on Friday as dovish comments from other central banks in Central Europe made Polish assets look relatively more attractive.
Currencies and stocks in the region posted cautious gains on hopes that a meeting of world financial leaders in Shanghai might provide reassurance on global growth prospects, which have been haunting markets during the first two months of 2016.
The forint and the leu both firmed by 0.2 percent against the euro by 0931 GMT. And although the zloty gained only 0.1 percent, against the forint it was near six-week highs, bid at 71.23.
Forint/zloty trade picked up and the zloty firmed this week after a Hungarian central banker did not rule out the bottom of the bank's interest rate corridor becoming negative, on top of other unconventional monetary easing measures.
Many policy makers in the region have become more dovish as expectations of a European Central Bank easing at its March 10 meeting rise and further US Federal Reserve rate hikes fade.
The Czech central bank discussed negative rates earlier this month and Serbia even cut rates.
In Poland, forward rate agreements are pricing in a 25 basis point cut in the central bank's main interest rate for the next few months as new rate setters appointed by the pro-growth government take the majority in March, although most analysts say their comments so far do not herald an easing.
"The possible lack of rate cuts in Poland will stay in contrast with policies of other central banks in the region, which should also support the zloty," Bank Millennium said.
The dinar firmed a shade against the euro, drifting further off 13-month lows after repeated market intervention by the Serbian central bank this week.
"Serbian dinar bonds should benefit from the stable (central bank) base rate outlook which we anticipate for the foreseeable future," Raiffeisen analyst Stephan Imre said in a note.
Hopes for further ECB stimulus in the euro zone is spurring more foreign currency bond issues from Central Europe.
Slovenia sold eurobonds on Thursday, before reporting a robust 3.3 percent annual rise in its fourth-quarter economic output on Friday.
Montenegro hired banks on Thursday for a possible eurobond issue, while Hungary did not give up its plan to issue bonds abroad despite strong demand for local bond issues.
"Especially as there is a good chance that Hungary (credit ratings) could be upgraded this spring, and based on market feedback in these cases after an upgrade it is worth tapping the market with a foreign currency bond," the head of Hungary's debt agency AKK said.
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