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Waving aside the onslaught on emerging market currencies, Hungary's central bank announced on February 4 that it is to launch a probe into market manipulation that it claims caused a sharp slide in the forint.

The Magyar Nemzeti Bank (MNB) said in a statement that it will investigate "false rumours" that it believes amount to market manipulation. "Rumours cited by the media on January 29 that Hungary could not pay its debts on foreign currency bonds were false... and negatively affected the exchange rate", the statement read, according to AFP. "The goal of the probe is to find out whether the rumours fit the definition of (illegal) market manipulation."

On the one hand, the MNB may have a valid point. Reports emerged on January 29 claiming that Hungary would fail to meet payment duties for a nearly €1bn foreign-currency bond. Despite swift denial from the state debt agency AKK, the speculation added to the forint's slide, which lost around 2% to hit a two-year low against the euro. The currency has recovered a little ground since.

At the same time, the MNB has done little to help the forint as emerging markets have moved into the eye of the storm in recent weeks. Despite tumbling currencies across Emerging Europe - which forced Turkey's central bank, for instance, to defy the government in an attempt to defend the lira with a massive rate hike - MNB Governor Gyorgy Matolcsy insisted on January 29 that Hungary's easing cycle (18-months and counting right now) will continue.

The comparison with Turkey is not a coincidence. Ankara - and in particular the spiky Prime Minister Erdogan - has long insisted that it is the victim of an international conspiracy formed by the markets and recently specified as the "interest rate lobby". In a similar vein, PM Viktor Orban likes to tell Hungarians that the country must guard against domination and attacks from a loosely-defined collective that appears to include the EU, the banks, and financial investors amongst others.

Whilst the majority of analysts suggest Hungarian debt is a strong asset, they continue to note that the forint is vulnerable to shocks due to erratic government policy and the MNB's long easing cycle, which currently has rates at a record low of 2.85%. A common view amidst the ongoing EM selloff is that the markets feel they have forced the Turkish central bank to raise rates, and that they may have Hungary in their sights for similar.

Analysts at Commerzbank point out: "at present low interest rates, Hungary will quickly become a focus during sharp risk-off moves. What is more, wage growth and core-inflation are flat at much higher levels, not heading towards deflation territory as headline CPI is doing (because of utility price cuts); there is divergence between CB rhetoric and reality here."

The speculation of problems meeting bond obligations continues to hang over Hungarian assets. The February 12 expiry of HUF439bn worth of bonds will be watched closely, bond traders told the Wall Street Journal on February 3.