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WARSAW, Oct 15 (Reuters) - The Croatian central bank may need to intervene again in the local foreign exchange market next month, or in December, to provide euros for the conversion of Swiss franc loans into the single currency, the central bank governor said on Thursday.
"If the provision goes as planned there may be the need for another intervention between mid-November and mid-December," governor Boris Vujcic told Reuters on the sidelines of a financial conference in Warsaw.
The Croatian centre-left government, which faces a parliamentary election on Nov. 8, last month enforced a law on the conversion of the Swiss franc loans into euros to help borrowers who were hit by the surge of the Swiss franc against the euro.
Last month the Croatian central bank sold 268.3 million euros ($310 million) to the local banks to support the national kuna currency which came under pressure when banks needed to buy euros to adjust their foreign currency positions due to the conversion.
Banks have until mid-November to convert the principals into euros and deliver new repayment plans for loan holders.
The central bank estimated that the conversion would cost the banks some 8.5 billion kuna ($1.28 billion) which is equivalent to their combined profits over three years. Some banks have already appealed to Croatia's Constitutional Court against the forced conversion.
The overall value of the Swiss franc loans in Croatia is some 25 billion kuna. The central bank earlier assessed that its reserves could fall by up to one billion euros due to the conversion.
Many households and businesses in Croatia and other countries in eastern Europe took out Swiss franc loans during a credit boom in 2000s, but have been caught out by a surge in the franc, particularly this year after Switzerland scrapped its cap on the franc. ($1 = 6.6640 kuna) (Reporting by Francesco Canepa, Writing by Igor Ilic in Zagreb; Editing by Toby Chopra)