Poland's zloty pulled back from three-week highs on Friday as a higher than expected current account deficit for August marred what is otherwise an improving economic outlook, while other Central European assets were mixed. The zloty traded at 4.19 against the euro at 1406 GMT, down 0.1 percent from Thursday and off a 3-week high touched in early trade.
Financial markets across the developing region have firmed this week due to growing hopes of an economic upturn and a deal in the US to avert a debt default which would also hit European economies and markets. The zloty retreated on Friday as Poland's August current account deficit came in at 719 million euros, well above analysts' 205 million euro forecast.
"The data was disappointing for the market, but I would not say that it will have an impact in the long term," said Andrzej Krzeminski, chief of dealers at BPH in Warsaw. The zloty was still firmer by 0.2 percent against the euro over the week, while Hungary's forint gained 0.4 percent.
The forint was bid at 295.20, weaker by 0.2 percent from Thursday, off an 11-week high hit earlier in the session. A rise in tobacco and financial services prices pushed up Hungary's annual inflation rate to 1.4 percent in September from 1.3 percent in August, but a decline in inflation is expected to continue and the central bank could reduce its 3.6 percent base rate further towards 3.0 percent, market participants said.
Hungarian government bonds extended the week's gains. The yield on 3-year bonds declined 7 basis points to 4.40 percent. Romania's leu firmed 0.1 percent to the euro, the Serbian dinar shed 0.3 percent while the Czech crown was flat. Shares in Telefonica Czech Republic, a unit of Spain's Telefonica, rebounded about 3 percent on Friday after falling more than 8 percent in the previous session when it first traded ex-dividend.
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