The Polish zloty strengthened to a four-week high as the Federal Reserve’s pledge to buy bonds until the U.S. job market improves boosted investor appetite for riskier assets.
The zloty jumped as much as 0.9 percent to 4.0489 per euro, the highest since Aug. 17 and traded at 4.0658 as of 4:16 p.m. in Warsaw. It had the second-steepest gain among more than 170 currencies tracked by Bloomberg. The cost to insure Polish debt against the risk of non-payment for five years fell 14 basis points to 109 basis points, according to credit-default swap prices compiled by Bloomberg.
Emerging-market stocks rallied the most in 11 months and currencies gained after the Fed said yesterday it will expand holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month and hold the federal funds rate near zero “at least through mid-2015.”
“The outcome of the Fed meeting supports our expectations that the zloty’s appreciation trend will continue,” Piotr Bujak, chief economist for Poland at Nordea Markets in Warsaw, wrote in an e-mailed note to clients. “The decision has clearly improved the sentiment on the global financial markets.”
The zloty and Russian ruble “stand out” to benefit from Fed’s announcement that sent a “bullish” signal for emerging market currencies, Guillaume Salomon, a London-based strategist at Societe Generale SA, wrote in an e-mailed note to clients.
Salomon is recommending investors buy the zloty against the U.S. currency in anticipation that it will reach 3 per dollar, according to Salomon. The zloty appreciated 2.4 percent to 3.0899 per dollar today, data compiled by Bloomberg show.