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MNB ‘fine-tuning’ FX stock level after latest tender

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The National Bank of Hungary (MNB) allotted HUF 175 billion of forint swaps against euros at a tender yesterday, level with the amount of swaps maturing, state news wire MTI reported.   

The total stock of the swaps, which the central bank introduced a year ago as a "fine-tuning instrument" for market liquidity after it put a cap on placements in three-month deposits, its main sterilization instrument, will thus remain at HUF 1.312 billion.

The MNB allotted HUF 25 bln of one-month swaps, HUF 50 bln of three-month swaps and HUF 100 bln of 12-month swaps. Banks bid EUR 180 million (HUF 56 bln) for the one-month swaps, EUR 245 mln (HUF 76 bln) for the three-month swaps, and EUR 999 mln (HUF 311 bln) for the 12-month swaps.

The total swap stock will comprise HUF 165 bln of one-month, HUF 225 bln of three-month, HUF 223 bln of six-month and HUF 699 bln of 12-month swaps at the value date on November 8.

Central bank policy-makers recently 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".

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