The Hungarian forint slid on foreign exchange markets on Tuesday as investors begin to understand the implications of the government’s plan to bail out private borrowers at the expense of commercial banks. Prime minister Viktor Orban’s government recommended legislation to the country’s parliament that would force banks to compensate consumer who took out foreign-currency loans and were stuck with unilateral interest rate increases. The government also wants to force the banks to convert the foreign currency loans into local currency loans.
The forint fell 1 percent on Tuesday, closing at 312 per euro. Banks in Hungary could lose as much as HUF 1.1 trillion as a result of the government’s policy. Consumers took out thousands of Swiss franc loans but ran into trouble when the forint plummeted in value during the financial crisis.
