MNB accepts HUF 275 bln offers to reduce 3m depo stock, as planned


Jessica Fejos

The National Bank of Hungary (MNB) accepted HUF 275 billion placements in its three-month deposits for banks at a tender on Wednesday, the same as the announced volume, whereby the stock fell to HUF 500 bln, as planned.

Banks bid to place HUF 403 bln in the facility, the central bankʼs main liquidity sterilization instrument, somewhat more than the HUF 350 bln expiring three-month deposits. 

The tender reduced the three-month deposit stock by HUF 75 bln to HUF 500 bln, the upper limit set by the MNB in March for the end of the second quarter. The stock dropped HUF 250 bln from the end of Q1, in line with plans.

The MNB Monetary Council on Tuesday set a HUF 300 bln cap for the three-month depo stock by the end of Q3. The Council decides on the cap on a quarterly basis, and will next decide in September on the cap applying to the end of 2017.

The MNB made the three-month depo tenders less frequent last summer, then started placing quarterly caps on three-month depo tenders last autumn in an effort to force more liquidity onto the market. The central bank has been using one-week, one-month and three-month EUR/HUF swaps, and, from March this year, six and twelve-month EUR/HUF swaps, as other unconventional instruments for policy easing.

The total stock of the liquidity fine-tuning EUR/HUF swaps stands at present at HUF 850 bln, including HUF 400 bln of one-month, HUF 300 bln of three-month, HUF 100 bln of six-month, and HUF 50 bln of twelve-month swaps.


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