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Banking sector liquidity falls in May, says MNB

Forint liquidity of Hungaryʼs banking sector fell in May from a month earlier, the National Bank of Hungary (MNB) said in a report today based on preliminary data, state news agency MTI reported.

The average stock of external assets fell relative to April and the end-of-month stock also decreased.

The average stock of external assets fell by HUF 294.7 billion to HUF 7.9845 trillion. The stock of external assets stood at HUF 7.9165 tln at the end of May, down from HUF 8.228 tln at the start of the month. Transactions decreased the stock of external assets by HUF 120.9 bln, and revaluations and other factors by a further HUF 190.6 bln.

The MNB noted the decrease was partly caused by the maturity of a GBP-denominated bond at the beginning of May issued by the Government Debt Management Agency (ÁKK), and partly by exchange rate changes.

The fall in the forint liquidity of the banking sector was reflected in the decline in the average stock of credit institutionsʼ overnight and three-month deposits and in a more modest rise in the average stocks of other deposits. The stock of three-month deposits has been declining steadily as a result of the introduction of a quantity limit on the instrument in October 2016.

The stock of three-month deposits, the main sterilization instrument of the MNB, dropped from HUF 725 bln to HUF 575 bln from the start of the month to the end of May, and the average stock was down HUF 59.5 bln at HUF 686.3 bln.

The average stock of overnight deposits of monetary financial institutions fell from HUF 658.9 bln to HUF 481.5 bln during the month.

The average stock of central government deposits was down by HUF 46 bln to HUF 1.6483 tln in May. The stock stood at HUF 1.6847 tln at the end of the month, compared to HUF 1.9461 tln at the start of the month.

At HUF 3.6 bln, the monthly average of the banking sectorʼs current account balances with the MNB exceeded reserve requirements by the usual amount. In May, reserve requirements amounted to HUF 186.7 bln.