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Coping with the speculative attack against the forint's band


Author Info

  • Gyula Barabás (ed.)

    (Magyar Nemzeti Bank)

  • Csaba Balogh

    (Magyar Nemzeti Bank)

  • Tamás Czeti

    (Magyar Nemzeti Bank)

  • Szilárd Erhart

    (Magyar Nemzeti Bank)

  • Zsolt Érsek

    (Magyar Nemzeti Bank)

  • András Kármán

    (Magyar Nemzeti Bank)

  • Gergely Kóczán

    (Magyar Nemzeti Bank)

  • Róbert Rékási

    (Magyar Nemzeti Bank)


On 15 and 16 January 2003, an intensive speculative attack was launched against the exchange rate band of the forint. This study analyses the monetary policy decisions with regard to the antecedents of the speculation, the events of the speculative episode and the subsequent period of consolidation. The study finds that the speculative attack was irrational and unjustified in view of several considerations. Through adjustments in the policy rate and the modification of monetary instruments, the MNB was able to defend the exchange rate band of the forint. The MNB successfully localized the effects of the speculative attack on the interbank market. The MNB’s presence on the foreign exchange market facilitated the rapid and controlled withdrawal of the speculative capital, without threatening the disinflation process and the stability of the financial system. The investors taking part in the speculation incurred substantial losses, while the market developments after the speculative episode increased the banking system’s profit.

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Bibliographic Info

Paper provided by Magyar Nemzeti Bank (the central bank of Hungary) in its series MNB Background Studies (discontinued) with number 2003/3.

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Length: 34 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:mnb:backgr:2003/3

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Related research

Keywords: financial markets; speculative attack; exchange rate; speculative episode.;

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Cited by:
  1. Péter Gábriel & Klára Pintér, 2006. "The effect of the MNB’s communication on financial markets," MNB Working Papers 2006/9, Magyar Nemzeti Bank (the central bank of Hungary).
  2. Jan Filácek & Roman Horváth & Michal Skorepa, 2006. "Monetary Policy before Euro Adoption: Challenges for EU New Members," William Davidson Institute Working Papers Series wp853, William Davidson Institute at the University of Michigan.


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