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Polish Zloty Maintains 10-Month High, Hungarian Forint Gains Ground

On Thursday, the Polish zloty remained close to a 10-month high as the weakness of the U.S. dollar increased the demand for currencies in Central Europe. At the same time, Hungary’s forint approached the one-year high from which it had fallen last week. Despite the discovery of a “military object” in a forest in northern Poland, which caused the country to be on alert for possible spillover from the war in Ukraine following Russia’s invasion, the zloty remained strong. The Polish currency has outperformed its regional counterparts in recent weeks, thanks to fading rate cut expectations and a weaker dollar. The zloty traded at 4.589 against the euro at 0831 GMT, down 0.1% but still close to its strongest level since June 2022. According to ING, there is still plenty of room for a rally in the zloty, which has been on a two-week streak. ING expects the Czech crown and the Polish zloty to attract more interest as markets continue to unwind some of the risk premium built up in the zloty in the first quarter. Czech lender MONETA Money Bank’s shares were up 0.6% in morning trade, after posting a less-than-expected 6% year-on-year drop in net profit in the first quarter, showing a net release of bad loan provisions. In Hungary, state-owned Eximbank issued a 5-year dollar-denominated benchmark bond worth $1.25 billion with a yield of 6.32%, while the forint rose 0.2% to trade at 373.05 against the euro. The currency had retreated from its peak of 369.60 last week when the central bank announced it would narrow its rate corridor with a cut to the top rate. However, the forint is slowly recovering towards stronger levels, supported by the 18% quick-deposit rate, which allows traders to play the carry trade during the long weekend ahead. Photo by Keyacom, Wikimedia commons.

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