Financial Times FT.com

Foreign currency lending: Risks of Swiss franc loans loom large over Hungary

By Spencer Jakab

Published: May 19 2011 17:28 | Last updated: May 19 2011 17:28

Though few fully appreciated the risks, the middle of the last decade saw retail borrowers in central and eastern Europe embrace a favourite technique of sophisticated investors – the so-called “carry trade”.

This involves borrowing money in a low-yielding currency in order to purchase an asset in a currency that is likely to provide a higher return.

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