WARSAW: Weakness in the dollar fuelled gains in 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 across the region also gained following 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 0.4 percent to 4.1528 versus the euro, its strongest level in a week.
Bank Pekao said in a note that it was getting support from the decline in the dollar – often heralding higher global risk appetite – against the euro.
The Polish currency – one of world’s best performinglast year – was also helped by comments from the head of the European Commission, who said on Wednesday said he saw a “good chance” of a rapprochement between Poland and the EU.
“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. “Nevertheless (…) we shall follow further developments with cautious optimism.”
The right-wing Law and Justice (PiS) party government has clashed with the EU executive on a number of issues including migrants and a judicial reform. Poland changed its prime minister in December.
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, while the Czech crown rose 0.1 percent.
“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.
Hungary sold 80 billion forints ($320 million) worth of government bonds at an auction on Thursday, 15 billion forints more than planned.
In the Czech Republic, trade unions at Volkswagen’s Skoda Auto – one of the country’s biggest exporters – rejected a wage offer from the carmaker and started preparations for a possible strike.
Source: Brecorder.com
