BUDAPEST: Poland's zloty and Hungary's forint slipped in value on Monday while yields on longer-dated government bonds rose, the same pattern seen in other emerging and developed economies after remarks by Federal Reserve Chair Janet Yellen.
Short term yields, which remain high relative to those offered in the euro zone and the United States and so attractive to investors, held firm or extended recent gains.
The yield on Hungary's three-year bond dropped 2 basis points to 1.33 percent from Friday's fixing, compared with a rise of 2 bps in the corresponding German yield to -0.637 percent. Poland's two-year yield rose 2 basis points to 1.76 percent, while the 10-year yield followed Bunds 5 basis points higher, to 3.08 percent.
The zloty and the forint had both eased 0.3 percent against the euro by 0903 GMT, although the Polish was off an October low of 4.3169 touched in early trade.
A move beyond 4.32-4.34 is unlikely in the short-term, one Warsaw-based trader said.
The dollar romped to a nearly seven-month high and long-dated US bond yields climbed after Yellen said on Friday the Fed may need to run a "high-pressure" economy to reverse damage from the 2008-2009 financial crisis.
Her remarks raised speculation that Yellen may be willing to let inflation run above the Fed's 2 percent target and keep an easy monetary policy stance for a long time.
That caused the US yield curve to steepen as prices on longer dated Treasuries, which are most sensitive to inflation expectations, fell sharply and their yields shot higher. European yields also rose ahead of Thursday's European Central bank policy meeting.
US data on Friday showing a rebound in retail sales in September reinforced expectations of a Fed interest rate hike in December, although investors do not see the Fed moving aggressively thereafter.
Standard & Poor's decision a month ago to lift Hungary's credit rating back to investment grade has buoyed the national currency, and should continue to underpin it, one Budapest-based dealer said.
"I would not say that Yellen's words were frightening ... the forint should even firm in the short term due to (Hungarian) fundamental factors," the dealer added.
Stocks in the European Union's emerging east mostly shrugged off falls in Asian and Western European equity markets.
Czech energy group CEZ shares rose 0.8 percent, outperforming the Prague market, after its Temelin nuclear power station Unit 2 went back online at the weekend for the first time since August.
Hungary's FHB rebounded from an initial fall after the bank's Chairman Zoltan Speder, a businessmen who fell out of favour with Prime Minister Viktor Orban, resigned.
In Warsaw, state-run insurer PZU rose 3 percent, rebounding from a two-week low following a report in daily Puls Biznesu that board member Beata Kozlowska-Chyla had resigned.
Romania's parliament is expected to vote on Tuesday on a bill to convert Swiss franc mortgages into leu, after worries about the plan and its likely cost for banks sent the leu to three-month lows earlier this month.
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