I’m not sure whether to laugh or cry …
- Croatia’s parliament has approved a government plan to fix the kuna-Swiss franc exchange rate at 6.39 kuna for the next 12 months
- Around 60,000 households have foreign currency loans denominated in Swiss francs, amounting to around 27 billion kuna ($3.9 billion), or a little under eight percent of gross domestic product (GDP) (Reuters)
- The fix is meant to help these borrowers who now face much higher repayments after the surge in the value of the CHF
- Croatia’s prime minister, Zoran Milanović, said the exchange rate would be fixed for 12 months to allow the government to find a longer-term solution, possibly including a mass conversion into kuna … the Croatian National Bank (the central bank of Croatia) opposes such a conversion, saying it would deplete currency reserves by 30%
- More at Reuters (link above) and FastFT (gated)
Ryan had the early heads-up on this plan quite a few days ago
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CHF/HRK over the past year … reasonably stable until it wasn’t:
