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Swiss Franc soars

January 17th, 2015

In a comment on the shock caused by the decision of the Swiss National Bank to lift the currency cap which pegged the Swiss Franc to the Euro, commentators on both Left and Right praise the government’s earlier decision to convert FX mortgages into Forint loans.

The Hungarian government can now be applauded for saving Hungarians indebted in foreign currencies,” Népszabadság writes in a front page editorial. As the foreign currencies needed for the wholesale exchange wave have already been put at the disposal of creditor banks by the National Bank at last year’s rate, commercial banks will not accrue losses if the Franc strengthens. While the daily acknowledges the government’s wisdom in exchanging all FX mortgages at a fixed rate to Forint loans (see BudaPost November 12), it notes that those who have other types of loans than mortgages will incur substantial losses from the soaring Swiss Franc. As for the wider implications, the shock shows that Hungary is a small country that is highly vulnerable to external events.

In Magyar Nemzet, Anna Szabó points out that the authorities which from 2004 to 2009 did nothing to restrict the highly risky FX loan schemes, made the country extremely vulnerable to external shocks. As all national and regional currencies including the Euro plummeted after the decision of the Swiss National Bank to abandon the currency cap, the weakening of the Forint has nothing to do with internal factors, the conservative columnist notes. Szabó praises the government for doing its best in order to get rid of FX loans through different policies, including last year’s decision to convert all mortgages at a fixed rate, which now safeguards both debtors and commercial banks against the strengthening of the Swiss Franc. Szabó, however, is also worried about what will happen to the 380 thousand borrowers with non-mortgage loans denominated in different foreign currencies.

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