The Hungarian unit weakened to 323.34 from 318.92 against the euro during the period and slid to 275.13 from 271.15 against the dollar.

The SNB explained the decision to scrap the franc’s floor citing the depreciation of the euro against the dollar. Analysts said people with foreign-currency car loans could be most affected and the country’s banking sector could also encounter problems, but borrowers with mortgages will be unaffected.

Hungary is in the process of phasing out retail lending stock denominated in foreign currency, much of it in Swiss francs. Parliament approved legislation on the conversion last November, setting the exchange rate for the conversion at the average National Bank of Hungary fixing between June 16 and November 7, 2014 or the fixing on the day of November 7, 2014, whichever is more favourable to borrowers.

The law would imply a forint rate of 256.47 to the Swiss franc and 308.97 to the euro.

Source www.hungarymatters.hu

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