Switzerland’s ceiling on the franc’s exchange rate will bring relief to eastern European borrowers struggling to repay Swiss franc loans and cash-strapped governments running out of options to help them.
The Swiss National Bank’s imposition of a minimum rate of 1.20 francs per euro sent the Hungarian forint soaring as much as 10 percent against the Alpine currency, the most on record, to as much as 225.784. The zloty rose as much as 9 percent to 3.453.
Hungary and Poland, the two countries most-indebted in Swiss francs, suffered after monthly installments soared when investors sought safety in francs and shunned euros and dollars as the European and U.S. debt woes roiled markets. Two-thirds of Hungarian mortgage loans and 54 percent of Polish loans are based in francs. That’s equivalent to 16 percent of gross domestic product for Hungary and 10 percent of GDP for Poland, according to UBS Wealth Management.
Eastern Europe’s Borrowers See Relief as Swiss Peg Franc to Euro - Bloomberg
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