Zloty Goes to Worst From First as Crisis Risks Tusk Budget

Poland, the fastest-growing major eastern European economy, is losing favor with investors as the euro zone’s widening debt crisis undermines confidence in Prime Minister Donald Tusk’s ability to cut the budget gap.

The zloty is down 16 percent against the dollar and 9.9 percent versus the euro this quarter for the worst performance among European currencies, after leading gains in the previous three months. Investors are betting on bigger swings in the zloty than any other European developing-nation currency, based on the implied volatility shown by option prices. Poland’s credit risk is the highest in 29 months compared with Germany, Europe’s biggest economy.