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HUF 100 bln EUR/HUF swap keeps outstanding stock unchanged

Telco

Photo by Jessica Fejos

The National Bank of Hungary (MNB) allotted HUF 100 billion of one-month forint swaps against euros, in line with expiries, at a tender on Monday, the central bank website shows.

The MNB did not invite tenders for any of the other maturities for which there are no expiries on August 23, state news wire MTI reported.

With HUF 100 bln of one-month swaps expiring on the August 23 value date, forint liquidity injected into the system through the swaps will remain unchanged on Wednesday.

Bids came from nine banks and totaled EUR 898 million (HUF 273 bln). The accepted HUF 100 bln was double the originally tendered HUF 50 bln.

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 earlier main sterilization instrument.

On Wednesday, the total stock of the swaps will remain at HUF 950 bln, including HUF 200 bln of one-month, HUF 350 bln of three-month, HUF 250 bln of six-month, and HUF 150 bln of twelve-month swaps.

The MNB said it continuously observes liquidity trends and stands prepared to hold further tenders for the instruments if it sees "substantial and lasting" deviations.

Deposit tender on Wednesday

Banking sector liquidity will be affected by the regular monthly three-month central bank deposit tender, which will be held on the current swap tenderʼs settlement day on August 23.

The outstanding three-month deposit stock is HUF 500 bln at present, of which HUF 175 bln will expire on Wednesday. The MNB will announce a volume limit for that tender on Tuesday.

The MNBʼs Monetary Council set a HUF 300 bln limit on the stock of three-month deposits for the end of Q3.

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