The Polish zloty briefly hit a 7-month high versus the euro on Friday propelled by upbeat US jobs data, but analysts worry that the rally that has seen the currency gain nearly 10 percent this year may be running out of steam. Hungary's forint also gained on rising hopes that the country may be inching closer to an aid deal with international lenders.
The Polish zloty gained 0.3 percent, trading at 4.088 to the euro, setting earlier a new multi-month high at 4.0855. "The rally we have seen in January and February is more and more vulnerable. Most of the good news has been priced in," said Guillaume Tresca, an emerging market strategist at Credit Agricole.
Market players were looking past the success of Greece's deal to write off a large chunk of its debt to the private sector to the broader issues of whether it could right its sinking economy and public finances and stay in the euro zone. With its 9-percent rise this year, the zloty has outperformed other currencies in the region, benefiting from Poland's robust economic growth and slowly improving fiscal situation.
"From a fundamental point of view Poland is currently closest to being the regional haven," said Carolin Hecht, FX analyst at Commerzbank. "But we still see high risks in the euro zone and expect risk aversion to rise in the second half of the year." The crown strengthened by 0.6 percent on the day, to its strongest in five months.
The crown, once considered the safest bet in the region, has seen its status undermined by a recession as data showed the Czech economy contracting on a quarterly basis for the second time in the October-December period. Hungary's forint rose 0.7 percent, as Hungarian data on Friday also showed its economy grew an annual 1.4 percent in the fourth quarter.
A Reuters poll on Thursday pointed to gains of 3 percent against the euro in the next 12 months, but the euro zone crisis and Hungary's delayed aid talks posed risks. ING said on Friday it saw short-term value in a short zloty/forint position after Poland's central bank eased some of its hawkish rhetoric this week when it left interest rates flat.