Muscular Swiss franc creates financial havoc in Poland and Hungary

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Muscular Swiss franc creates financial havoc in Poland and Hungary

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The fallout from the decision taken by the Swiss National Bank to remove the cap on its currency is a dream for some and a nightmare for others.

In Geneva queues formed outside foreign-exchange offices as those with Swiss francs hastily changed them into euros while the going was good.

One such man expressed his delight: “For me it is excellent news, for everything, for holidays, for shopping. I do a lot of shopping in France it is cheaper than in Switzerland and now its even cheaper we must seize the moment.”

Not much chance for cheer in Poland where more than 1.5 million are exposed to higher interest repayments on Swiss loans.

The country’s finance minister is due to meet local bankers and regulators next week as the opposition called for the government to offer relief to those hit by the muscle bound franc.

Real estate analyst Marcin Krason says the rate change is a bad dream: “By taking an fx loan, we agree to a certain risk. Those thousands of people that have taken the risk, agreed to it. They paid very low installments for a few years, but now the bad times have well and truly arrived.”

In Hungary the problems could reach monumental proportions, last year the country ordered $14 bn of foreign-currency mortgages, mostly in Swiss francs.

The idea, initially, was to prevent the country becoming a victim of currency swings.

Thursdays decision in Bern has dropped a political bomb on Budapest.