Fremdwährungskontrollen

Fremdwährungskredit refers to a loan taken out in a currency other than the borrower's home currency. This is also known as a foreign currency loan. For example, a German resident might take out a loan denominated in US dollars. The primary motivation for taking out a Fremdwährungskredit is often to benefit from lower interest rates available in the foreign currency market or to hedge against future exchange rate movements.

However, Fremdwährungskredite carry significant exchange rate risk. If the borrower's home currency depreciates against the foreign currency in which the loan is denominated, the cost of repaying the loan in the home currency will increase. Conversely, if the home currency appreciates, the repayment cost will decrease. This risk can be substantial, especially for long-term loans or in periods of high currency volatility.

Borrowers must carefully consider their tolerance for risk and their expectations of future exchange rate movements before entering into a Fremdwährungskredit agreement. Financial institutions offering these loans typically require borrowers to have a certain level of financial sophistication and understanding of the associated risks. Sometimes, these loans are used by businesses operating internationally to finance their operations or investments in foreign markets.