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MNB: Hungary could cover all FX needs for 2016 through yuan issue

The National Bank of Hungary (MNB) is supporting a plan to issue yuan-denominated bonds by the State of Hungary, and is of the view that all of Hungaryʼs 2016 foreign exchange needs can be met through the issue of yuan bonds, the MNB said in a press statement on Friday.

The MNB published the statement in response to an article by daily Világgazdaság on Friday which reportedly said that discord between the economy ministry and the central bank is behind the postponement of a yuan issue.

Taking into account the increasing role of China in the global economy and the importance of the renminbi in the international monetary system, the MNB expressly supports the issue of yuan bonds with the hopes of developing Hungarian-Chinese financial relations, the MNB said.

Hungaryʼs Government Debt Management Agency (ÁKK) said on Wednesday that it had wound up a non-deal road show for a yuan bond issue, without giving information on the timing or the size of the upcoming issue.

Citing an individual close to the matter, Dow Jones reported on Thursday that Hungary is putting off its plan to issue yuan-denominated bonds due to market turmoil.

The head of Hungaryʼs Government Debt Management Agency (ÁKK) György Barcza told daily Magyar Idők on Friday that news of Hungary putting off its plan to issue yuan-denominated bonds was false as no date was set in the first instance, but he did confirm that ÁKK is planning an FX denominated bond issue. Barcza said that it will be market factors that determine when and in what foreign currency Hungary will issue bonds.

National Economy Minister Mihály Varga said in December 2015 that Hungary could issue a yuan bond up to CNY 3 billion (€420 million) in 2016.