Poland, Turkey and Italy ETFs Lead Global Sell-Off

Zloty to Compete with Dollar?Emerging European countries led a global sell-off Wednesday. It seemed to show that the prior session’s sharp spike was merely a relief rally.

Volatility surged as investors punished banks and continued to seek refuge in the precious metals.

Market Vectors Poland ETF (PLND) fell 10.78% — the most among all nonleveraged ETFs. It hit a 13-month low after suffering a 27% freefall this month. It closed Wednesday a steep 35% below its 52-week highs reached in May.

Poland has largely been immune to Europe’s fiscal crisis. But the market has been troubled by the zloty’s 20% plunge against the Swiss franc since the start of July.

Nearly 53% of home loans are denominated in francs, whose low interest rates attracted borrowers, according to the Finance Ministry.

As the franc strengthens, Polish borrowers owe more in zlotys. Bending to public pressure, the country passed a law Tuesday to let borrowers pay debts in foreign currencies to avoid exchange fees.

Prime Minister Donald Tusk tried to assure the public that the Eastern European country remains financially secure despite the European woes.

Compared to other European countries, Poland’s balance sheets shine. Its $224 billion debt amounts to half of GDP. That’s less than $6,000 per person, and it increases about 8% annually, according to the Economist.

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