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Gov’t to fix exchange rate to help debtors

In order to help troubled foreign-currency debtors, the government plans to freeze the forint-Swiss franc exchange rate at about HUF 190 until the end of the current election period, online portal Hírszerző reported citing bank sources.

The measure would affect only the basis of the debts and would not impact exchange rates in general.

According to plans, the debtors would eventually have to repay the relief after the grace period as the gap of the fixed and the real currency exchange rates would convert into a new loan that the banks would offer with “relatively low interest”. Fixing the rates, if carried out as planned, could cause trouble to banks and also siphon huge amounts of money from the state budget, the portal added.

However, the levies of the measures would not only be a burden for the bank sector. The government also plans to compensate the banks if the gap between the fix and the real rates would grow too big, Hírszerző learned.

90% of the foreign currency debt in Hungary is Swiss franc denominated. Calculated with the current forint-franc rate of HUF 210, the measure would translate to HUF 13,000 relief in the monthly installment of a loan amounting HUF 10 million with duration of 15 years.