Polish Zloty, Forint Strengthen First Day This Week on Manufacturing Data

The zloty strengthened for the first time this week and the forint snapped a three-day selloff after manufacturing growth in the U.S., China and Poland accelerated faster than forecast, easing concern about the global recovery.

The zloty advanced 0.6 percent at 3.9743 per euro as of 4:19 p.m. in Warsaw. The forint appreciated from its weakest against the euro in more than a month yesterday, rising 0.8 percent to 284.81. The two currencies had the steepest gains among more than 20 emerging-market currencies tracked by Bloomberg.

Poland’s manufacturing grew in August at the fastest pace in three years, HSBC Holdings Plc said today, citing a survey by Markit Economics. Inflation may have risen to 2.1 percent last month from a three-year low of 2 percent in July, the Finance Ministry estimated.

The “overall number is strong and reinforces our view that the industrial output is likely to surprise on the upside,” Luis Costa, a London-based emerging markets strategist at Citigroup Inc., wrote in a report today. Citigroup expects Poland will start increasing interest rates in October, Costa said. “Chances of hike surprises are indeed increasing,” he wrote.

Equities rallied worldwide and the euro gained against the dollar after China’s manufacturing and Australia’s economy grew faster than economists estimated, easing concerns that the global economic recovery is slowing. The currencies extended their gains after manufacturing in the U.S., the world’s largest economy, expanded at a faster-than-forecast pace in August.

‘Tricky Situation’

Hungarian manufacturing expanded in August for a second month, signaling a recovery from the country’s worst recession in 18 years, the Hungarian Logistics, Purchasing and Inventory Society said today.

The forint has been the worst performer among more than 20 emerging-market currencies tracked by Bloomberg this year, weakening 5.3 percent versus the euro, after the government said it won’t seek a new loan from the International Monetary Fund. Hungary was the first European Union member to obtain an IMF bailout in 2008 to avert default during the global credit crisis.

“Hungary should face a tricky situation in the next couple weeks and the speculation on chances of a new IMF deal will be the key driver of Hungarian assets,” Costa wrote.

To contact the reporters on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net; Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

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