WARSAW: Weakness in the dollar fuelled gains in most central European currencies on Thursday, with the zloty getting a further lift from signs that tensions between Poland and the European Commission might ease.
Stocks in the region also mostly gained taking a cue from increases in Asia and on Wall Street, where markets brushed aside strong US inflation data and recovered further from steep looses suffered earlier this month.
The zloty gained 0.3 percent to 4.1564 versus the euro by 1429 GMT, its strongest level in a week.
The Polish currency - one of the world's best performing last year - was also helped by comments from the head of the European Commission, who said on Wednesday he saw a "good chance" of a rapprochement between Poland and the EU.
The ruling right-wing Law and Justice (PiS) party has clashed with the EU executive on a number of issues including migrants and judicial reform.
"This sounds encouraging, but we are sceptical that the PiS government will make any necessary adjustments for such a deal to be completed," Commerzbank said in a note. "(...) we shall follow further developments with cautious optimism."
Data showing Polish inflation slowed to 1.9 percent in January did not impact the currency, cementing expectations that interest rates will remain unchanged until at least the start of 2019.
The Hungarian forint gained 0.2 percent, regaining some ground after falling on Wednesday.
"The forint was bolstered by favourable international sentiment," analysts at Erste Investment said, adding the gains did not mean that a recent weakening trend versus the euro would be broken.
In the Czech Republic, trade unions at Volkswagen's Skoda Auto - one of the country's biggest exporters - started preparations for a possible strike. The Czech crown was unchanged.
The Romanian leu was also flat, hovering close to an all-time low versus the euro that it touched in January. On Thursday Romania rejected all bids at a treasury bond tender, for the 17th time since October.
"Uncertainty over the interest rate outlook is the main reason for the low bids, this and the external debt context," said Ciprian Dascalu, chief economist at ING Bank Romania.
"The market is expecting rate hikes but it is unclear by how much they will rise," Dascalu said.
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