First, banks need to strengthen their credit management to mitigate credit risks. One crucial area which needs to be addressed is that of currency mismatches. Foreign currency loans account for 43 percent of total bank loans, but the majority of borrowers operate businesses in the non traded goods sectors of the economy.
Even if borrowers of foreign currency loans which operate in non traded sectors price their output in dollars, as many owners of commercial property do, they are still vulnerable to shifts in the real exchange rate, because their customers do not earn dollars.