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Demand for MNB three-month FX swaps at five-month peak

MNB

Demand for three-month floating rate EUR/HUF swaps rose to €285m, the highest value since the middle of June at the National Bank of Hungary (MNB)’s weekly tender on Monday.

The MNB accepted all bids it received.

Demand rose from €55m a week earlier, and was more than double of the expiring volume. Demand for the three-month FX swaps reappeared on November 2 after practically no interest between September 12 and October 24.

The MNB offered, as usual, a maximum of €400m three-month swaps on Monday, and the swaps were offered at a maximum 336.65 swap points. With the €125m swaps expiring on Wednesday, the outstanding volume will rise to €640m on the November 16 settlement day, Econews calculated.

Wednesday’s rise will be the first significant increase of the stock since September 5, when it reached €1.48bn, its highest level since early February.

Demand for the facility rose for most of August parallel with the steep strengthening of the Swiss franc, in which a large part of the Hungarian retail loan stock is denominated, against the forint. It vanished after the Swiss National Bank announced a 1.20 CHF/€target early September, and reappeared at the beginning of November.

The MNB has been offering three-month floating-price EUR/HUF swaps since March 2009. It also has been operating one-day FX swaps daily since October 2008. The swap facilities, with two other ones already eliminated, were launched to ease Hungarian banks’ access to FX financing.

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