Hungary's forint rebounded from a six-week low on Friday after slower US jobs growth eased some nerves over the trimming of stimulus measures, while Poland's zloty rose on signs of recovery in central and eastern Europe's largest economy. The forint has come under pressure in recent weeks because of uncertainty over Budapest's plans to tackle foreign currency loans, but was able to regain some ground in the afternoon, firming 0.6 percent on the day to bid at 298.71 to the euro.
The weaker-than-expected US jobs data could make the Federal Reserve more cautious about trimming its stimulus programme, which has helped push money into higher-yielding emerging markets. But for the forint, dealers said a break above the 300 level this week meant the currency was unlikely to show real strength in the short term. Markets are watching government talks with banks over ways to reduce the burden on Hungarians who had taken out foreign currency loans but are now struggling to service them.
Earlier policies to deal with the problem have inflicted losses on banks and hit investor confidence in the country. Hungarian Economy Minister Mihaly Varga said on Friday he had discussed several options with banks for phasing out existing foreign currency mortgages, and that converting them into forints is just one of the proposals. In Poland, where Thursday's PMI data signalled an economic revival may be taking hold, the zloty gained 0.5 percent to 4.235 to the euro.
Barclays said it was turning "increasingly positive" towards the Polish currency, given a quickly shrinking current account gap combined with an end of the rate cut cycle and high real interest rates. "We recommend using the recent bout of PLN weakness to enter into longs against the EUR and CZK," Barclays said in a note, adding it targeted a strengthening to 4.15 against the euro and to 6.30 versus the crown. The Czech crown rose 0.3 percent, recovering some ground lost on Thursday when the central bank strengthened its warning it may step into the currency market to help ease monetary policy.
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