The MNB wants to help banks acquire the necessary foreign currency from the MNB rather than from the market – as mass conversions on the market might impact the forint’s value. Accordingly, the bank will extend its existing foreign exchange sales program, launched late in September, in which it allocated €3 bln from its foreign reserves to meet demand for the settlement of refunds due borrowers under summer legislation.
The Hungarian government plans to phase out retail foreign exchange loans – converting them into forint loans – next year, as a third step in recent legislation helping troubled borrowers. The central bank sees the need to establish a formal framework for cooperation with banks in the process of the FX loan conversion. FX-denominated loans made up 53% all outstanding retail loans.
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