Currency report: Złoty stronger again

Polish markets were boosted this week by data showing Poland's current account had swung into surplus for the first time in 16 months and the budget deficit after 10 months was just 54 percent of the full-year plan. Emerging markets were also helped by benign US inflation data that bolstered the view that the US economy is slowing down.

According to Stanisław Owsiak from the Monetary Policy Council (RPP), Poland's central bank should keep interest rates on hold for several quarters to come as inflation remains low, capped by the strong złoty and productivity gains. The inflation data supported the dovish faction in the RPP - annual price growth slowed to 1.2 percent last month.

The złoty ended a week of gains on a down note on Friday, retreating from eight-month highs due to weakening sentiment on emerging markets, candidate for central-bank president Urszula Grzelońska's statement in an interview that the złoty is overvalued by 10-15 percent, and doubts about adoption of the euro.

Marek Węgrzanowski X-Trade Brokers Dom Maklerski SA