KBC Market Research Desk
KBC Bank
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Hungarian government unveils details of FX loans conversion
Czech PPI lower than expected
Yesterday’s trading was fairly calm in Central Europe. In the Czech Republic, markets remained closed due to national holiday. The Polish zloty and the Hungarian forint showed little activity and even in Hungary, where the government submitted details of the conversion of foreign currency loans into forints to the Parliament, the currency kept within a narrow band. The governmental proposal suggests mortgage loans to be converted at exchange rates 256.47 CHF/HUF and 308.97 EUR/HUF. Current exchange rates are 255 CHF/HUF and 306.3 EUR/HUF, i.e. slightly stronger than the proposed rates. According to Economy Minister Varga, however, the proposed exchange rates should be favorable for borrowers at the moment the conversion are planned to be made, i.e. in February 2015. Interest rates on the converted loans should be linked to 3-month BUBOR (currently 2.1 %), while interest premium should be identical with the original forex loans. The conversion is not put forward as compulsory; however, conditions for those who would want to opt out from the scheme would be strict.
Regarding today’s data, Czech PPIs surprised by having fallen more in October than expected. According to the Czech statistical office, producer prices dropped 0.4 % m/m and 0.3 % y/y. The fall was caused first of all by prices of agricultural producers, which dropped 3.9 % compared to the same month previous year. While the market impact of the Czech PPI will remain very limited, we believe that much more attention will be paid to the fresh German ZEW index to be published later today.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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