Hungary's Who-Blinks-First Versus Markets Nears Decisive Moment

The National Bank of Hungary is locked in a staring match with the market, and the moment of reckoning may be near.

As interbank rates continue to climb in defiance of policy makers’ push to keep funding conditions loose, the monetary authority probably needs to double down on its unconventional easing methods. It will have to boost supply of currency swaps at a regular sale next week -- when 60 billion forint ($223 million) of existing contracts mature -- to pump more cash into markets if it wants to pin short-term rates near zero, according to OTP Bank Nyrt.