Tuesday, 18 November 2014 Hungarian government unveils details of FX loans conversion

Tuesday, 18 November 2014
Headlines
-0.6
EUR/CHF
1.20
0.1
EUR/PLN
EUR/HUF
EUR/USD
EUR/CHF
FX Correlation Matrix
0.12
0.19
0.01
0.05
EUR/CZK
EUR/PLN
0.03 -0.15 -0.08
EUR/HUF
-0.05
EUR/USD
0.06
-0.07
correlations of 10 min changes
ov er past 5 sessions
FRA 3x6
%
bps chng
CZK
0.31
2
HUF
2.05
-3
PLN
1.89
3
EUR
0.10
0
%
bps chng
GB
Czech Rep. 10Y
0.81
0
Hungary 10Y
3.67
-7
Poland 10Y
2.60
-1
Slovakia 10Y
1.46
0
CDS 5Y
%
bps chng
Czech Rep.
47
0
Hungary
172
0
Poland
66
0
Slovakia
51
0
Source: Reuters
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.
EUR/HUF
311
310
309
308
The forint says
around its fourweek highs.
307
306
305
11/18/2014
1.24
11/16/2014
EUR/USD
Czech PPI lower than expected
11/14/2014
-0.2
11/12/2014
4.22
11/10/2014
0.1
EUR/PLN
11/8/2014
-0.1
11/6/2014
306.4
11/4/2014
27.66
EUR/HUF
11/2/2014
EUR/CZK
Hungarian government unveils details of FX loans
conversion
10/31/2014
% chng
10/29/2014
Currencies
EUR/HUF, last 15 day s. Source: Reuters
Tuesday, 18 November 2014
Interest-rate Swap Curves
3,0
CZK
HUF
120, 00
PLN
5
7
700, 00
100, 00
4
600, 00
2,0
160, 00
80, 00
5
500, 00
3
110, 00
60, 00
%
1,0
%
3
300, 00
%
400, 00
40, 00
2
60, 00
20, 00
2
1
2
1
3
2
1
1
200, 00
2
0,0
0, 00
1
- 40, 00
2Y
3Y
4Y
5Y
change (bps)
6Y
7Y
11/17/2014
8Y
9Y 10Y
11/14/2014
1
1
1
1
1
2
2Y
3Y
4Y
5Y
6Y
7Y
100, 00
2
1
0
10, 00
0
- 20, 00
-1,0
1
0, 00
-1
-2
-2
-2
-3
-4
-4
-16
-6
2Y
3Y
4Y
5Y
6Y
7Y
8Y
9Y 10Y
change (bps)
-7
- 100, 00
11/17/2014
-1
- 40, 00
11/14/2014
change (bps)
8Y
11/17/2014
9Y 10Y
11/14/2014
Calendar
Country Tim e
CZ
9:00
Indicator
PPI
Period
%
10/01/2014
Forecast
Actual
Consensus
Previous
m /m
y/y
m /m
y/y
m /m
y/y
m /m
y/y
-0.2
-0.1
-0.4
-0.3
-0.2
-0.1
-0.3
-0.3
Contacts
Brussels Research (KBC)
Piet Lammens
Peter Wuyts
Joke Mertens
Mathias van der Jeugt
Dublin Research
Austin Hughes
Shawn Britton
Prague Research (CSOB)
Jan Cermak
Jan Bures
Petr Baca
Bratislava Research (CSOB)
Marek Gabris
Budapest Research
David Nemeth
Global Sales Force
Brussels
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Prague
+420 2 6135 3535
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+421 2 5966 8820
+36 1 328 9989
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