Hungarian assets came under intense pressure on March 13 on worries over containing the fallout from the failure of Silicon Valley Bank, the biggest US bank to collapse since the 2008 financial crisis.
The Hungarian forint traded at 393 to the euro on Monday night on the interbank forex market, softening 3% from 381.5 at the start of trading. The USD/HUF was quoted at 366 up from 356.1 against the dollar.
The sell-off was less intense among regional peers, with the Czech koruna and the Polish zloty only falling slightly on Monday.
The forint’s intraday plunge underscores the vulnerability of the currency despite the highest lending rates in the region. The MNB introduced the overnight deposit rate of 18%, 5pp over the benchmark rate, in mid-October to stem the forint’s decline, which hit historic records five months ago, after the MNB stopped its monetary tightening cycle.
The 12-plus-unit drop against the euro was the 18th largest intraday decline, but in terms of percentage points, the 3.2% drop was the 44th largest on record.
The National Bank issued a statement in the afternoon trying to reassure markets about the stability of the Hungarian banking sector.
The consolidated capital adequacy ratio is about one and a half times higher than 15 years ago and banks have some HUF1.5 trillion (€3.9bn) in liquidity buffers above the required capital adequacy levels, it said.
The MNB stated that it will continue to monitor the sound functioning of domestic credit institutions through ongoing supervision, through annual timetables and other inspections.
The Budapest Stock Exchange's main BUX index finished Monday down 2.97% at 41,797.81, falling with its peers in Europe. The BUX hit a four-month low before 3 pm, dipping below 40,000 points to stage a late rally in the last two hours of trading
OTP Bank dropped 5.37% to HUF 9,700. At the start of trading, shares of CEE’s leading lender were down 10% at 9,132, a four-month low. Oil and gas company MOL lost 1.01% to HUF 2,538 and shares of pharmaceutical group Richter dipped 1.93% to HUF7,350.