Polish Zloty Gains Most in Two Weeks Before Report on Industrial Output

The Polish zloty advanced the most in two weeks before a report this week that may show the country’s industrial output grew for a ninth month in July, a signal that economic recovery is gathering pace.

The zloty strengthened 0.6 percent to 3.9790 per euro as of 5:08 p.m. in Warsaw. It appreciated the most among 25 emerging- market currencies tracked by Bloomberg, followed by the Hungarian forint with a 0.5 percent gain. Bond prices rose, pushing the yield on five-year notes 5 basis points lower to 5.26 percent.

Poland’s industrial output probably increased by 12.1 percent on an annual basis in July, the statistics office may say on Aug. 18, according to median estimate from a Bloomberg survey of economists. Poland, the only European Union economy to avoid recession through the global credit crisis, has benefited from the recovery in Germany. A report last week showed Europe’s biggest economy grew the fastest since its reunification in the second quarter.

“Good Polish economic data and the decline in global risk aversion should support further strengthening of the zloty in the medium term,” Bank Millennium SA economists wrote in a weekly note to clients.

Poland’s Economy Ministry estimates that the country’s industrial output grew by “close to” 11 percent in July from a year earlier, the PAP newswire reported. Output may rise about 12 percent in the third quarter, PAP said, citing the ministry.

Zloty-denominated bonds are “the best buy” in central and eastern Europe, Jyske Bank A/S, Denmark’s second-largest lender, said today.

“Poland is a much better investment case than Hungary, the Czech Republic and Romania,” Kent Iversen, a Copenhagen-based strategist at Jyske, wrote in a note to clients. “Above all because we believe in appreciation of the zloty” and inflation is at a three-year low. Jyske expects the zloty to appreciate to 3.90 per euro in six months and 3.80 per euro in 12 months.