Varga: No decision on FX conversion yet

MNB

Hungary’s Economy Minister Mihály Varga said late yesterday that no decision has been made on the exchange rate at which FX loans will be converted into forint loans. The minister gave an interview on commercial television program HírTV.

The Hungarian government is scheduled to phase out FX loans next year as a third step of recent legislation established to help distressed borrowers. Under the recently passed legislation, banks must refund retail clients on the exchange rate spread they used on FX loans and on unilateral changes to interest and other fees.

The phase out must meet the requirements, such that forint loan borrowers should not fare worse than FX borrowers and that the exchange rate risk on FX loans should be borne by the borrower – in line with the ruling of Hungary’s Supreme Court, the Kúria.

Setting a rate below the current exchange rate requires cooperation of the National Bank of Hungary given that part of the international reserves has to be used in the conversion, Varga said.

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