The 1-week deposit rate went up to 6.15% today

HUNGARY - In Brief 24 Mar 2022 by Istvan Racz

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This represented another +30 bps, continuing the MNB's step-by-step tightening policy. As we said twice already, the Bank has appeared to defend the EURHUF 370 level in practice since early November, and as the exchange rate stood at 375 immediately before the decision, it may have appeared appropriate to make another step today, following the no-change decision of last Thursday. At any rate, the market did not seem impressed by the move: after a moderate forint strengthening as an instinctive first reaction, EURHUF quickly moved back to roughly where it was before the announcement of the new deposit rate.While we have your attention, a CORRECTION is due to yesterday's monthly report regarding Sberbank Hungary. We wrote that the bank had HUF150bn of deposits before its liquidation was announced, and a predominant share of that was secured by the local deposit insurance system. Indeed, the insurance-covered total was HUF147bn, of which HUF112bn has been paid out already. But the total deposit stock was HUF360bn, meaning no insurance on HUF213bn or 0.35% of GDP, HUF25bn of which was owned by individuals, and the rest belonged mainly to enterprises and a few small local governments. This is still not a dramatically big amount, but it is not negligible either. The owners of uninsured deposits can now queue up as creditors for the bank's liquidation process.Our previous statement was based on a carefully worded but slightly misleading previous communique that HUF150bn, a big part of the deposit stock was insured, and 1000 clients had bigger deposits than €100k, the ceiling for individual deposits' insurance coverage. The specific numbers were reported for the first time onl...