"The region strengthened after surprisingly good (US) payrolls data," said Tomasz Chmielarski, dealer at BRE bank in Warsaw. "And when it comes to the zloty, the unit is amazingly stable in the past few days, moving in a range of 4.115-4.16 with no sign of that changing ahead."
Earlier on Friday, currencies fell after data from Hungary and the Czech Republic showed the two countries are still in recession, with the Czechs suffering their longest contraction in 15 years. Romania's economy also shrank in the third quarter, while Poland slowed sharply.
Emerging Europe is struggling due to weak spending by austerity-hit consumers and a slowdown in trade because of the euro zone debt crisis. Central banks have started easing policy in the second half of this year. That is putting pressure on currencies, although easing concerns over the euro zone and cheap liquidity in world markets have buoyed the region.
"With domestic demand subdued and external demand set to weaken as the euro zone slides deeper into recession, we think growth in central and south-eastern Europe will slow further over the coming quarters," Capital Economics' emerging market economist William Jackson said. The zloty and the forint are among the best-performing global currencies this year with a rise of 8 percent and 11 percent respectively against the euro, although they have both lost around 2 percent since hitting 2012 highs in August.
In the fixed-income market, Polish bonds hit new record highs with traders citing a strong inflow of funds from foreign investors. Polish bonds have rallied on the back of Poland's relatively healthy fundamentals, tight fiscal policy and a global hunt for well-paying debt from relatively secure issuers. "The downward move (on yields) continued. It seems like we don't need to understand this, we just need to forget about the "sell" button on our keyboards nowadays," said one Warsaw-based fixed income trader.
The Romanian leu, which has lagged its peers in the region this year with a decline of almost 5 percent against the euro due largely to political uncertainty, fell 0.1 percent ahead of a national election on Sunday that is keeping investors cautious. The leftist government is on course for a clear victory in Sunday's poll, but a new government will have little room to ease austerity while also seeking a new deal with the IMF early next year. Hungary has also been looking for a financing deal with the International Monetary Fund and European Union, but Budapest seems to be moving further away from an agreement.