16 Jan 2015
Expensive CHF a problem for Poland rather than Hungary – KBC
FXStreet (Barcelona) - According to KBC Bank, Polish Zloty is more at risk than the forint after the EUR/CHF floor was abandoned by the SNB, with Poland’s outstanding CHF loans standing at 8% of its GDP, and disinflation concerns hinting towards possibility of another rate cut by the NBP, making the zloty less attractive.
Key Quotes
“Let’s start with Hungary. Thanks to government measures, the biggest part of the foreign currency households loans (all mortgage loans and free use mortgage loans) were fixed and covered by the banks from the 1st of January. The remaining part is only around HUF230bn or EUR0.7bn, which is 0.7% of GDP. So the Swiss National Bank's decision has only a marginal effect on Hungarian loans and banks.”
“For Poland, the situation is less optimistic but thanks to the National Bank of Poland’s ban on granting foreign‐currency mortgages (imposed a few years ago), it is not that dramatic.”
“Currently, outstanding CHF loans amount 8% of GDP. Fundamentally, the Swiss exit is therefore a much greater problem for the zloty and the Polish economy than for Hungary and the forint. Hence the rapid appreciation of CHF (if maintained) poses a risk for the zloty.“
“That risk is even bigger because of Poland’s extremely low inflation (‐ 1.0% y/y for December) which raises the likelihood of another rate cut by the NBP and makes the Polish currency less attractive.”
Key Quotes
“Let’s start with Hungary. Thanks to government measures, the biggest part of the foreign currency households loans (all mortgage loans and free use mortgage loans) were fixed and covered by the banks from the 1st of January. The remaining part is only around HUF230bn or EUR0.7bn, which is 0.7% of GDP. So the Swiss National Bank's decision has only a marginal effect on Hungarian loans and banks.”
“For Poland, the situation is less optimistic but thanks to the National Bank of Poland’s ban on granting foreign‐currency mortgages (imposed a few years ago), it is not that dramatic.”
“Currently, outstanding CHF loans amount 8% of GDP. Fundamentally, the Swiss exit is therefore a much greater problem for the zloty and the Polish economy than for Hungary and the forint. Hence the rapid appreciation of CHF (if maintained) poses a risk for the zloty.“
“That risk is even bigger because of Poland’s extremely low inflation (‐ 1.0% y/y for December) which raises the likelihood of another rate cut by the NBP and makes the Polish currency less attractive.”