MNB allots combined HUF 100 bln at EUR/HUF swap tenders

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The National Bank of Hungary (MNB) allotted HUF 50 billion of six-month forint swaps and HUF 50 bln of 12-month swaps against euros, both the maximum volumes on offer, at tenders held Monday, the central bank said, according to state news agency MTI.

Bids for the six-month swaps reached HUF 307 bln (EUR 995 million), while bids for the 12-month swaps reached HUF 255 bln (EUR 825 mln).

The six-month tender was the second, and the 12-month tender the first, since the MNB announced at the end of March the extension of its "fine-tuning" swap facilities by these two maturities.

The central bank introduced the tenders for the FX swaps in the fall as a "fine-tuning instrument" for market liquidity after it put a cap on placements in three-month deposits, its main sterilization instrument.

After the settlement of Mondayʼs tenders on May 24, the outstanding stock of FX swaps will rise by HUF 100 bln to HUF 750 bln. The outstanding stock will include HUF 400 bln of one-month swaps, HUF 200 bln of three-month swaps, HUF 100 bln of six-month swaps and HUF 50 bln of 12-month swaps.

The MNB said it is continuously observing liquidity trends and is ready to offer further tenders for the instruments if it sees "substantial and lasting" deviations in the market.

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