BUDAPEST: The forint hit 10-month highs on Wednesday amid expectations that Hungary's central bank will start to tighten liquidity in markets late this month to fight inflation.
The currency crossed the 315 line against the euro for the first time since May last year, and traded at 314.80 at 1055 GMT.
Central Europe's most liquid currency, the zloty was stuck at 4.3 versus the euro, with the euro/dollar cross little changed.
Investors held their breath as Britain's parliament voted down late on Tuesday a plan for an orderly exit from the European Union on March 29.
If Britain leaves without a deal this would pose risks to the region's foreign trade, but as markets are already aware of this risk the forint's strengthening was natural, market participants said.
Prime Minister Viktor Orban's press chief confirmed media reports on Wednesday that local UniCredit head Mihaly Patai could become central bank deputy governor next month.
That prospect does not change expectations for gradual monetary tightening as Patai is regarded as an ally of Governor Gyorgy Matolcsy, market participants said.
"The forint may head towards 313.30-50 now," one Budapest-based dealer said.
The dealer also said the central bank might increase its -0.15 percent overnight deposit rate at its March 26 meeting, but it was more likely to only cut market liquidity via its fx swap facility.
Monetary tightening is likely to advance in "baby steps" as the European Central Bank delays its own rate hikes, ING analyst Peter Virovacz said.
Romania's leu also firmed, by 0.2 percent to 4.763 versus the euro, rebounding from multi-week lows against the euro and the zloty.
Investors await government decisions by the end of this week to amend new taxes imposed on sectors including banks, which knocked Romanian assets down in the past few months.
The leu rebounded from levels beyond 4.77 against the euro despite fresh data showing a fall in Romania's industrial output in January, even though net wages surged by over 18 percent in annual terms.
A surge in the trade deficit was already highlighted by figures released on Tuesday.
ING analysts said in a morning note that even though the Romanian central bank, which often intervened in the market in the past to manage the leu, did not mop up increasing surplus liquidity in markets this month, "a line in the sand will be reinforced".
In a separate note, ING said the fall in industrial output was driven by a government cap on gas prices, while a slowdown in euro zone export markets pointed to stagnation in Romanian industrial output this year.