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Hungary central bank allocates EUR 65m of three-month FX swaps at tender

MNB

The National Bank of Hungary (MNB) received and accepted EUR 65m bids for three-month floating rate EUR/HUF swaps at the weekly tender on Monday.

Interest in the fx swaps dropped further after heavy demand on August 8 and 15, 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.

The MNB allocated EUR 140 million of the three-month swaps on August 8 and EUR 255 million on August 15 before demand and allocation dropped to EUR 75 million on August 22.

The MNB offered the usual maximum of EUR 400 million three-month swaps at a maximum 206.59 swap points on Monday. It allocated the swaps between 206.55 and 206.59 swap points, the latter also the average. With EUR 40m expiring on Wednesday, the outstanding volume will rise to EUR 1.457 billion on the August 31 settlement day, Econews calculated. The stock will be at its highest level since early February.

After a jump around the end of last year, demand for the weekly tenders subsided in the spring, before rising steeply again, reflecting uncertainties surrounding Greece, by late June. The renewed interest in August followed a backdrop for most of July.

The MNB started to offer three-month floating-price EUR/HUF swaps and six-month fixed-price EUR/HUF swaps to banks weekly in March 2009. The latter facility ran out as planned by the end of 2010. The bank also offered one-week CHF/EUR swaps weekly between February 2009 and January 2010.

The bank has been operating one-day FX swaps daily since October 2008. The swap facilities were launched to ease Hungarian banks' access to FX financing.

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