BUDAPEST/WARSAW: Central Europe's main currencies firmed on Monday, with the zloty outperforming the forint after Poland published strong economic output data.
The region's equities tracked Western European peers lower as a weekend meeting of G20 leaders did not come up with a plan to stimulate the slowing global economy.
But Polish figures released on Monday confirmed a robust 3.9 percent year-on-year rise in GDP in the fourth quarter of 2015, with consumption rising 3.5 percent after 1.9 percent, and investments up 4.9 percent compared to 4.6 percent.
Hungarian data showed a 7 percent jump in investments in the same period, though analysts noted that, while investments had surged in the public sector, they had continued to shrink in manufacturing.
The zloty hit a 7-week high, both against the forint and the euro.
At 1301 GMT it traded at 4.35 to the euro, 0.4 percent firmer, while the forint strengthened 0.1 percent to 311.20.
One Budapest dealer said the forint had been unable to stay on the stronger side of the 310 psychological line, while the zloty was looked set to break through 4.35. If that happened, it could enter a range of 4.28 to 4.34, one Warsaw dealer said.
Analysts said the zloty had been boosted by solid economic figures and a reduction in expectations of a central bank interest rate cut in Poland after dovish comments from the Hungarian central bank last week.
However, Erste Group analyst Katarzyna Rzentarzewska said deflation in Poland meant that the chance of a rate cut was "non-negligible".
"In our view, the persistence of deflation is an argument for a policy rate cut, despite the robust growth," she said in a note.
Central European government bond yields were mixed, while yields in the euro zone dropped slightly.
One Budapest fixed income trader said investors were waiting for a possible upgrade of Hungary by Moody's in a rating review due on March 4, and for an ECB council meeting on March 10.
Hungarian Economy Minister Mihaly Varga was quoted by the national news agency MTI as saying Hungary deserved to be upgraded because of its fourth-quarter economic data, including output, investments and employment.
Rating agencies have kept Hungary's debt in "junk" status since 2011 due to the unpredictability of economic policies and high public debt.
Serbia's dinar, bid at 123.33 against the euro, was off the 13-month low of 123.68 that it hit on Friday.
The Serbian central bank repeatedly intervened in the market last week to prevent a further fall in the currency which it keeps in narrow ranges in a managed float.
A visiting International Monetary Fund team said in Belgrade on Friday that the central bank should be more flexible on the exchange rate, but the bank's governor said on Monday it would continue to intervene in the market.
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