Central European currencies were mixed on Friday as Romania's leu fell, hurt by a domestic political crisis, while the forint firmed an thin trade as investors unwound long euro positions ahead of Budapest's international financial aid talks.
The leu led losses, falling 0.6 percent to 4.565 despite Romanian Prime Minister Victor Ponta's assurances on a visit to Brussels that his government would quickly address Europe's concerns over the rule of law and respect for constitutional court decisions relating to his move to impeach President Traian Basescu.
The forint rose by 0.5 percent, likely due to investors scaling back long euro positions against the currency as well as forint positions overall ahead of next week's negotiations, with the IMF and the EU on financial aid, a significant event carrying both downside and upside risks.
"It's normal that investors reduce risk ahead of such events by reducing positions," a dealer said.
Czech bond yields sank to all-time lows on the long end while the Polish 10-year bond yield hit a six-year low. Hungarian three- and five-year bond yields hit their lowest levels since late October, while the 10-year paper saw its yield drop to the lowest since mid-September.
Analysts said investors' interest in the region's debt is propelled by record low yields on euro zone core debt - German bonds firmed to five-year highs earlier on Friday - offering investors little return and prompting them to look for higher yields elsewhere.
The Czech crown was flat after a much-smaller than expected deficit on the May current account pointed to the country's solid external balance.
The Czech parliament approved a raft of tax hikes, pushing on with steps aimed at cutting its budget deficit despite signs previous hikes have hurt spending and the overall tax take.
Romanian Prime Minister Viktor Ponta met European Union leaders in Brussels to defend his campaign to oust President Traian and to address charges that it failed to respect constitutional checks and balances.