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The euro may have jumped against most of its peers since the first round of France’s presidential election on Sunday, but one currency in the region is managing to buck the trend.

The Polish zloty strengthened as much as half a per cent against the euro on Tuesday, following on from another healthy rise on Monday.

At publication time the currency was up 0.34 per cent against the euro for the day, at 4.2292 zloty per euro, not far from the Polish currency’s 15-month highs hit at the end of last month.

Against the dollar, meanwhile, the zloty has gained 2.6 per cent over the last two days, compared to the euro’s 1.5 per cent rise.

The policies of the right-wing Law and Justice government spooked many investors when it came to power last year, but the zloty has rebounded as the economy has shown resilience in the face of warnings and credit rating downgrades.

Ratings agency Moody’s upgraded its 2017 growth forecasts for Poland last month, and today it predicted that growth in 2018 will also be higher than it previously expected, raising its estimate from 2.8 per cent to 3.1 per cent.

Moreover, as Moody’s analyst Zusana Brixiova notes, the country’s inflation rate is sitting comfortably within the central bank’s 1.5 to 3.5 per cent target band. Ms Brixiova said “we expect CPI to remain close to the official target” of 2.5 per cent through to the end of 2018.

The decent inflation outlook has allowed the central bank to keep interest rates at a relatively high 1.5 per cent, with scope to lift them even higher in the near future.

Yields are supporting the zloty this week, according to Kit Juckes, strategist at Société Générale, who said:

With French political risk significantly reduced, an improving global economy, steadier oil prices, and most of all, range-bound US yields and a lack of fear of rapid Fed tightening, investors see few demons and are off in search of yield.

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