The tender was the second since central bank policy-makers decided to raise the MNBʼs stock of forint swaps against euros while assigning greater importance to the maturity structure of the stock with the aim of providing “the loosening effect up to the longest possible section of the yield curve as soon as possible.”
The MNB allotted HUF 50 bln of one-month, HUF 15.6 bln of six-month and HUF 150 bln of twelve-month swaps. It had offered HUF 25 bln of one-month, HUF 25 bln of three-month, HUF 50 bln of six-month and HUF 150 bln of twelve-month swaps.
Bids for the one-month swaps came to EUR 169 million, of which the MNB accepted EUR 160 mln, while bids for the six-month swaps reached EUR 50 mln, of which all were accepted. Bids for the twelve-month swaps reached EUR 802 mln, of which the MNB accepted EUR 482 mln. There was only a single bid for the three-month term, for EUR 1, which the MNB did not accept.
The tender brings the total stock of swaps to HUF 1,080 bln, a new record, while the average swap maturity will be extended significantly, the central bank said. The total stock of swaps will now comprise HUF 88 bln of one-month, HUF 324 bln of three-month, HUF 268 bln of six-month and HUF 400 bln of twelve-month swaps from the valuation date on October 4.
The central bank said it continuously observes liquidity trends and stands prepared to hold further tenders for the instruments if it sees “substantial and lasting” deviations. The central bank introduced the tenders for the FX swaps last autumn as a “fine-tuning instrument” for market liquidity after it put a cap on placements in three-month deposits, its main sterilization instrument.
MNB rate-setters decided at a Monetary Council policy meeting two weeks ago to ease monetary conditions further using “unconventional” measures, rather than lowering the base rate, which has stood at 0.90% for more than a year. They lowered the O/N central bank deposit rate from -0.05% to -0.15% and reduced the cap on three-month deposits to HUF 75 bln, as well as deciding to raise the stock of swap instruments.
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