Hungary has handed Bloomberg a HUF10m (€33,790) fine for an erroneous report on last month's rate decision by the central bank. The incident saw the forint hit hard, prompting the prime minister to renewed speculation of a market conspiracy against the country.
The misreported headline - filed six minutes ahead of the announcement from the Magyar Nemzeti Bank (MNB) of a 25 basis point cut, to leave rates at 4.75% - said that it had in fact trimmed the benchmark to 1%. The headline was corrected within 40 seconds, according to a statement from Hungary's financial regulator PSZAF on May 2. However, the forint weakened sharply, although temporarily, just before the publication of the rate decision.
The watchdog said the newswire's faulty reporting had influenced markets and that it had not used adequate controls to mitigate the damage, and hence it is guilty of market manipulation. "Although the news was published due to a technical error, the regulator believes that the news agency failed to apply control mechanisms to prevent false news being published," the statement said, according to Reuters.
PSZAF added that market manipulation is found when unfounded, misleading, and false information is published and "the person disseminating the information is aware of the fact that the information is false or misleading, or should have been aware of it had (the person) acted with the care that can be expected in the given situation".
"The authority regarded as a mitigating circumstance that the publication of the false news was due to an unexpected, automatic technical condition, which it was not possible to avert manually immediately," PSZAF added in its statement.
Prime Minister Viktor Orban and senior officials in the Fidesz government have often accused the markets in the past of conspiring against Hungary. For instance, in late 2011, the weakening of the forint and rising yields forced the PM into a reversal, as Budapest said it would seek an IMF bailout, even though Orban had kicked the international lender out the previous year.
Today, due to the high level of forex debt held by Hungarian households, the markets are seen as the one realistic brake on government policy, with Brussels and Washington routinely ignored. Gyorgy Matolcsy - formerly the main architect of policy as economy minister - blasted the "pirates" based in London's financial institutions weeks ahead of his appointment as head of the MNB.
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