Forint, BUX sharply down on Ukraine, verbal intervention by MNB

HUNGARY - In Brief 01 Mar 2022 by Istvan Racz

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Apparently, president Putin has decided to break Ukraine's resistance at all cost. At least this is the markets' conclusion from today's war events. Hungarian assets are hit hard: the BUX fell 10%, OTP fell 18%, and the forint dropped to 379.6 against EUR, the weakest ever level, earlier today. At that point, the MNB intervened by saying that it is ready to take any measure to stabilise domestic financial markets at any time, and it is watching events closely. This has brought back the forint to EURHUF 375-376.Meanwhile, the government keeps itself as far outside the war as possible. Hungary does not only refrain from sending weapons to Ukraine, unlike many other European states, but it does not allow others to transport weaponry to Ukraine through its territory and using its airspace. In addition, Hungary is not part of a nine-country declaration by CEE states, which supports Ukraine's fast track accession to the EU. Domestically, public media has been broadcasting news programs that follow a Russian-friendly evaluation of events and are just short of openly taking side with Russia's cause.However, this is not easy to do in these days, especially as the government wants to show loyalty to the largely anti-Russia community of the EU and NATO as well. This morning, e.g., Fidesz was forced into supporting a European Parliament resolution, which amounts to halting preparations for the Paks-2 nuclear power plant, reviewing residence permits granted to rich Russian individuals in Hungary and revoking the licence of the Russian International Investment Bank (the 'spy bank' according to opposition speakers) in Budapest. The driving force behind Fidesz' decision must have been...