Poland Wants to Limit Forex Exposure

Poland wants domestic banks to pass on negative interest rates in Switzerland to borrowers to ease the impact of the surging Swiss franc on $35 billion of mortgages denominated in the currency.

Finance Minister Mateusz Szczurek, central bank Governor Marek Belka and market regulators met with the biggest mortgage lenders on Tuesday after Croatia proposed fixing the exchange rate on similar loans to help borrowers. Polish measures stop short of Hungarian Prime Minister Viktor Orban’s move last year to order banks to convert $14 billion of foreign-currency loans into forint to cut his country’s exposure to currency swings.

“We made it clear to banks and banks agreed to take into account negative interest rates,” Szczurek told reporters in Warsaw after the four-hour meeting. “The market risk affects both banks and their clients. A client accepts the exchange rate risk while a bank takes the risk of interest rate moves.”

Switzerland’s unexpected decision to end its currency cap last week sent the zloty tumbling 22 percent against the franc, swelling payments for about 575,000 families who borrowed in the currency, and became a hot political issue before this year’s general election in Poland.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza