Zloty brushes off virus worries to lead FX gains
- This is ahead of holidays -- the zloty was underperforming earlier, now it's outperforming... it seems like the main reason is probably the market was long, squaring positions ahead of the Easter holidays.
- The zloty was 0.17% firmer against the euro at 4.624. The Czech crown was 0.12% firmer at 26.08 and the Hungarian forint was little changed at 362.10.
Central European currencies rose on Thursday, with the Polish zloty leading gains, as investors squared off positions ahead of the Easter weekend, brushing off concerns over a new record number of coronavirus cases in the country.
The zloty had touched a 12-year low at the beginning of the week amid concerns about surging numbers of COVID-19 cases in the country, but has since rebounded and outperformed regional peers.
"This is ahead of holidays -- the zloty was underperforming earlier, now it's outperforming... it seems like the main reason is probably the market was long, squaring positions ahead of the Easter holidays," a Warsaw-based currency trader said.
Grzegorz Ogonek, an economist at Santander Bank Polska, said the zloty had also been supported by a lower-than-expected 2020 general government deficit, which came in at 6.9% of GDP according to statistics office data.
At 0929 GMT, the zloty was 0.17% firmer against the euro at 4.624. The Czech crown was 0.12% firmer at 26.08 and the Hungarian forint was little changed at 362.10.
The forint has strengthened since last week, after the central bank said it was ready to prevent a sustained rise in inflation, traders said.
"The euro-forint rate is near a very important level. It arrived at the 50-day moving average, and if it breaks that, it can continue moving first until the 360-level," brokerage Equilor wrote.
Polish 10-year yields were little changed at 1.572%. On Wednesday, the Polish central bank, which had earlier announced that it would increase the frequency and flexibility of its bond-buying operations, said it could hold more operations in April.
Czech 10-year yields fell almost 7 basis points to 1.88%.
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