The tender was the first 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 13.3 bln of one-month, HUF 3.1 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 100 bln of the twelve-month swaps.
Bids for the one-month swap came to EUR 43 million, while bids for the six-month swap reached EUR 10 mln, all of which were accepted. Bids for the twelve-month swap reached EUR 716 mln, of which the MNB accepted EUR 322 mln (HUF 100 bln). There were no bids for the three-month term.
The tender will bring the total stock of swaps to HUF 989 bln, a new record, while the average swap maturity will be extended significantly, the central bank said. The total stock of swaps will now comprise HUF 63 bln of one-month, HUF 424 bln of three-month, HUF 253 bln of six-month and HUF 250 bln of twelve-month swaps from the valuation date on September 27.
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.
The MNBʼs Monetary Council decided at a policy meeting last week 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. It 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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