Swiss franc soars with dramatic effects for Romania’s banks

The exchange rate for the Swiss franc soared as much as 30 percent around the European Union in hectic trade after the Swiss central bank abandoned the cap on the currency’s value against the euro.

In Romania, Switzerland’s national coin traded at 4.3287 RON / franc, up 15.7 percent compared to the previous day. Romanians with mortgage loans in Swiss franc will have to pay an extra RON 300 – 350 for an average monthly rate of 500 – 600 francs as a result, writes Mediafax.

The Romanian leu lost ground versus several major currencies Thursday and the central bank’s reference fell 0.22 percent to 4.5034 per euro, the lowest rate since March 18, 2014.

The exchange rate chaos also had an affect on Banca Transilvania’s stock, which lost 2.5 percent on the Bucharest Stock Exchange by Thursday afternoon.

“There is far more volatility on foreign markets, and the banking sector is in a slump throughout the region. Banca Transilvania traded lower based on the decision to acquire Volksbank, a credit institution with a CHF-based loan portfolio that is quite large. The Volksbank deal is loosing its glitter and it shows in the price”, according to Liviu Avram, the head of Sales and Trading for NBG Securities.

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On 6 September 2011 the Swiss National Bank set a minimum exchange rate of 1.20 francs to the euro saying “the value of the franc is a threat to the economy”, however, with the continually falling euro over the following few years, the institution abandoned the ceiling on Thursday.