Poland’s currency lagged all developing-nation peers this week as investors braced for a shift in power in the European Union’s biggest eastern member after Sunday’s election.

The currency was little changed at 4.2529 per euro at 2:09 p.m. on Friday, leaving its loss this week at 0.4 percent, the worst performance among 24 emerging-market peers tracked by Bloomberg. Polish bonds lost 2.4 percent in U.S. dollar terms this week, the second-worst return among 11 east European countries after Hungary, according to data compiled by Bloomberg.

Opposition Law & Justice, which favors more government control over the economy, has promised to lower the retirement age and boost family benefits, is on track to oust the ruling Civic Platform in the Oct. 25 ballot. Its proposals to get the central bank more involved in supporting the economy sent the zloty to a nine-month low against the euro earlier this week.

“Investors significantly reduced their exposure to zloty bonds and the currency,” Luis Costa, the head of strategy for Central and Eastern Europe, the Middle East and Africa at Citigroup Inc. in London, said by e-mail. “They over-reacted to Law & Justice electoral promises and this positioning may normalize once the party’s policy starts to show a less damaging approach.”

Costa’s view is shared by Bank Pekao SA, a unit of UniCredit SpA. Law & Justice could appoint Mateusz Morawiecki, the chief executive of Bank Zachodni SA, as the next finance minister, which would be regarded positively by investors as he would be “unlikely to agree to a rapid deterioration of the fiscal state of the country,” Pekao economists led by Marcin Mrowiec wrote in a note today.

“Polish assets could rally if a new Law & Justice-led government is more market-friendly and backtracks on some of its election promises,” they said in their report.

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