Banking sector liquidity narrows further in July

Telco

Forint liquidity of Hungaryʼs banking sector narrowed in July from a month earlier, which was mainly reflected in a decrease in the average stock of one-day deposits, the National Bank of Hungary (MNB) said in a report based on preliminary data on Monday.   

The average stock of money in circulation rose by a further HUF 122 billion to HUF 5,709.8 bln. One-day interbank interest rates stayed at the bottom of the interest rate corridor throughout the month, according to a summary by state news wire MTI. 

The average stock of overnight deposits fell HUF 27.4 bln to HUF 1,128.5 bln. The average stock on banksʼ accounts held with the MNB rose HUF 6.7 bln to HUF 236.9 bln, while that of banksʼ other deposits with the central bank fell HUF 10.7 bln to HUF 7.7 bln.

The end-of-month and average stock of three-month deposits, earlier the main sterilization instrument of the MNB, remained at HUF 75 bln.  

The central bankʼs average stock of external assets fell by HUF 73.2 bln to HUF 8,480.5 bln. The end-of-July stock stood at HUF 8,316.3 bln, down HUF 231.4 bln from the start of the month, as the strengthening of the forint offset a HUF 23.7 bln rise due to transactions.

On average the forint weakened from June to July, but firmed in an end-of-month comparison, the MNB noted.  

The average stock of central government deposits was down by HUF 143.6 bln at HUF 858.4 bln in July. The stock stood at HUF 845.0 bln at the end of the month, and was down by HUF 99.9 bln because of transactions and by HUF 6.4 bln because of revaluations. Some 29% of the total drop was in government FX deposits, to HUF 263.3 bln.   

In July, the central bank fully renewed the expiring EUR/HUF FX swap tenders it organizes to provide forint liquidity. On balance, the total average stock of swaps rose just HUF 8.9 bln on exchange rate changes in July to HUF 2,064.2 bln. 

The monthly average of the banking sectorʼs current account balances with the MNB exceeded reserve requirements by HUF 22.2 bln. Reserve requirements amounted to HUF 214.7 bln in July.

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