Polish zloty volatility spikes to 3-year high as fear of Brexit hits EM assets

Poland, central Europe's biggest market, is expected to be the hardest hit, in the event of a vote to leave at the referendum on June 23. Around 1.5 million Eastern Europeans, especially Poles, live in Britain and the region has the most direct economic links not only straight to the UK but also via the eurozone, which could be hit hard by a Brexit.

Currency traders see little support for the zloty after central banker Jerzy Kropiwnicki signalled unwillingness to intervene until the zloty fell to 5 per euro. It currently trades around 4.42 per euro.

On Tuesday and Polish zloty volatility jumped to three-year highs as Brexit prospects drove investors towards safer assets including the dollar. Polish bond yields shot to multi-month highs and the zloty traded at its weakest in three weeks.