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MNB allots HUF 180 bln at EUR/HUF swap tender

Telco

The National Bank of Hungary (MNB) allotted a combined HUF 179.7 billion of swaps against euros at a tender on Monday, with terms between one and twelve months, data released by the central bank show, as cited by state news wire MTI.   

The tender was the third since central bank policy-makers decided to raise the MNBʼs stock of forint swaps against euros while assigning greater importance to the maturity structure of the stock with the aim of providing "the loosening effect up to the longest possible section of the yield curve as soon as possible."

The MNB allotted HUF 75 bln of one-month, HUF 4.7 bln of six-month and HUF 100 bln of twelve-month swaps. It had offered HUF 25 bln of one-month, HUF 25 bln of three-month, HUF 50 bln of six-month, and HUF 150 bln of twelve-month swaps.  

The tender will bring the total stock of swaps to HUF 1,260 bln, a new record, while the average swap maturity will be extended further, the MNB said.

The stock will comprise HUF 163 bln of one-month, HUF 324 bln of three-month, HUF 273 bln of six-month, and HUF 500 bln of twelve-month swaps from the valuation date on October 11.

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. 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 main sterilization instrument.

MNB rate-setters decided at a policy meeting three weeks ago to ease monetary conditions further using "unconventional" measures, rather than lowering the base rate, which has stood at 0.90% for more than a year. They lowered the O/N central bank deposit rate from -0.05% to -0.15% and reduced the cap on three-month deposits to HUF 75 bln, as well as deciding to raise the stock of swap instruments.

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