Zloty gains, Polish wages continue to surge

BUDAPEST: The zloty rose to a one-month high against the euro on Tuesday, while Poland reported robust wage growth figures for June.

Poland's data showed faster-than-expected 7.5 percent annual growth in wages, its second-highest rate since early 2012 . A surge in wages across Central Europe has been a key factor in accelerating inflation in the past two years.

A rise in crude oil prices this year added to inflationary pressure, but National Bank of Poland rate setters have not been worried. Annual inflation running at 1.9 percent in June is well within the bank's 1.5 to 3.5 percent target.

Core inflation rose to 0.6 percent and a likely rise to above 1 percent by the end of the year probably won't lead the central bank to raise rates before the end of next year, BZ WBK analysts said in a note.

The zloty rose a quarter of a percent to 4.2998 against the euro by 0904 GMT, above 4.3 to the euro for the first time since mid-June. It traded near the 75 line against its regional peer, the forint.

The forint also gained against the euro, to 322.86, off Mondays' four-week highs at 321.7.

Both Polish and Hungarian government bonds gained slightly. Regional equities were mixed.

Regional currencies and bonds benefited from improved international sentiment rather than any local factors, one Budapest-based trader said.

"The forint may approach 321 or even 320 now," the trader said.

Elsewhere, the kuna, a less liquid currency tightly managed by the Croatian central bank, set a two-week high at 7.39 versus the euro.

In Slovenia, the main stock index fell 0.8 percent, the biggest loss of the session in the region.

Slovenia may face early elections again as the conservative New Slovenia (NSI) party pulled out of coalition talks late on Monday.