MNB calls for a debt moratorium also for households, forint at new historic low

HUNGARY - In Brief 18 Mar 2020 by Istvan Racz

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This morning, the MNB called on domestic banks for the extension of a debt moratorium also for their household clients, in view of Covid-19 pressures, in a way similar to their earlier call that referred to institutional clients (more accurately enterprises). The formula used by the Bank's communiqué is also similar: should they see banks not complying with the call, the MNB would request the government to make legal amendments to enforce the debt moratorium for households in trouble. The MNB also expects banks to extend low-cost personal (unsecured) loans to their household clients during the Covid-19 crisis (low-cost meaning the base rate + max 5% interest), and expects banks not to impose penalties if their clients are late with redemptions.Since yesterday, the Bank holds 1-week FX swap tenders for domestic banks on a daily basis, in addition to its usual weekly FX swap tenders for 1-12 month maturities. This obviously puts downward pressure on the forint. EURHUF reached a new historic high at 349.4 this morning, from which level it has not corrected back yet. This level represents a 5.7% rise from end-December, which in fact compares quite well in comparison with PLN, CZK, TRY, ZAR and RUB.This morning, the total number of people with confirmed Covid-19 infection reached 58, a relatively small number in European comparison, Many claim that this is because the government carries out a relatively small number of tests. We think this is partly true and partly is not, so the situation seems indeed better than in Western Europe, But uncertainty in this regard remains very high. Hungary operates under strict limitations on activities and turnover, although people are sti...