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MNB tender raises ‘fine-tuning’ FX swap stock

Telco

The National Bank of Hungary (MNB) on Friday injected HUF 19.4 billion forint liquidity into the Hungarian banking system through one of its "fine-tuning swap tenders," offering one-month and 12-month forint swaps against euros.

The tender will raise the total stock by some HUF 4 bln to HUF 1,580 bln, as HUF 15 bln of one-month swaps will expire on the value date of the tender.

The total stock of outlays will thus include, from Wednesday, HUF 39.56 bln of one-month, HUF 24.76 bln of six-month, and HUF 1,516.17 bln of 12-month swaps, national news agency MTI reported.

On Friday the offered amount for the one-month EUR/HUF FX swap tender was EUR 31 million, or HUF 9.69 bln. Banksʼ bids totaled EUR 190 mln, or HUF 59.40 bln, of which the MNB accepted HUF 9.69 bln.

For the 12-month tender the offered amount was also HUF 9.69 bln. Banksʼ bids totaled EUR 210 mln, or HUF 65.65 bln, of which the MNB accepted HUF 9.69 bln. Four banks participated at both tenders.

The central bank introduced the tenders for the FX swaps in the autumn of 2016 as an instrument for managing market liquidity after it put a cap on placements in three-month deposits, its main sterilization instrument.

Also on Friday, Minister for National Economy Mihály Varga said that introducing the euro is an important economic policy decision but in itself is not enough for meaningful economic convergence. Economic convergence is impacted more strongly by member statesʼ economic policies focusing on competitiveness, and not by eurozone membership, Varga said in Sofia, Bulgaria, at the Ecofin meeting of EU finance ministers.

The minister argued that member states should retain free space to maneuver when it comes to improving productivity, employment, boosting investments, and performing structural reforms to help modern technological developments.

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