Loans contracted in exotic currencies have posted an eightfold increase in the past year, with Swiss francs and Hungarian forints gaining in popularity in terms of consumer and real estate financing.

Betting on RON growth and lured by the smaller interest rates, Romanians have quite overlooked warnings related to foreign currency and interest risks and have contracted eight times more loans in exotic currencies in the past year.

In late October, the volume of loans taken out in currencies other than RON, euros or dollars reached 4.7bn RON, from 587m RON a year ago, according to NBR reports that took into account loans worth above 20,000 RON.

In the case of exotic loans, the RON/franc rate is calculated indirectly. Thus, a possible Swiss franc increase against the euro means this currency will automatically rise against the RON. Practically, for a Swiss franc-denominated loan the increase will entail the payment of higher instalments in RON, to which foreign exchange fees levied by banks are added.

The US dollar is losing further ground on the lending market, with around 6.7bn RON having been borrowed in the US currency in late October, 8.3% less than in October 2006.

The waning interest in US dollar loans comes partly amid the US mortgage credit market crisis, but also amid the dollar's decline against the euro in recent years. The possible switch to the euro in 2014 has shifted the population's attention to euro-denominated loans to the detriment of domestic currency and US dollar loans.

Euro-denominated loans continue to lead in the population's preferences, with more than 50% of the overall 150.6bn-RON loan volume being represented by euro-denominated financing. At the end of October, the amount of euro loans stood at 77.9bn RON, up 64% year-on-year.

At the same time, RON-denominated loans have registered a 46% advance in