Banking sector liquidity continues to fall in August

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Forint liquidity of Hungaryʼs banking sector fell in August from a month earlier, the National Bank of Hungary (MNB) said in a report on Monday based on preliminary data, according to Hungarian news agency MTI.

The average and end-of-month stock of external assets both decreased in August. The decline in the average stock mainly reflected the strengthening of the forint exchange rate. The average stock of external assets fell by HUF 227.4 billion to HUF 8,198 bln.  

The stock of external assets stood at HUF 9,950 bln at the end of August, down from HUF 10,146.8 bln at the start of the month. Transactions decreased the stock of external assets by HUF 146 bln, and revaluations and other factors by a further HUF 50.9 bln.

The average stock of lending to credit institutions fell in August. The average stock of one-week loans to banks contracted, while the average stock of three-month loans increased somewhat during the period. The average stock of currency in circulation increased slightly.

The stock of three-month deposits, the main sterilization instrument of the MNB, grew from HUF 1,705.3 bln to HUF 1,780.2 bln from the start of the month to the end of August, but average stock was down HUF 91.3 bln at HUF 1,554.3 bln for August.

The average stock of overnight deposits of monetary financial institutions grew to HUF 136.9 bln from HUF 102.7 bln during the month.

The average stock of central government deposits fell by HUF 19.7 bln to HUF 1,298.5 bln in August. The stock stood at HUF 1,276.6 bln at the end of August compared to HUF 1,384.8 bln at the start of the month.

The downward shift for central government deposits was the net result of two opposing changes. EU transfers received in August pointed to an increase but the contraction was primarily caused by the carry-over effect of an FX bond maturing in July.

At HUF 52 bln, the monthly average of the banking sectorʼs current account balances with the MNB exceeded reserve requirements by a slightly greater amount than in the previous month. In August, reserve requirements amounted to HUF 344.4 bln.

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