MNB ‘fine-tuning’ FX stock unchanged after tender

MNB

The National Bank of Hungary (MNB) allotted HUF 150 billion of forint swaps against euros at a tender on Monday, 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 bln.

The MNB allotted HUF 50 bln of one-month swaps and HUF 100 bln of twelve-month swaps. Banks bid EUR 323 million for the one-month swaps and EUR 322 mln for the twelve-month swaps.

The MNB had also offered a three-month swap, but refused a single bid of EUR 20 mln.

The total swap stock will now comprise HUF 216 bln of one-month, HUF 274 bln of three-month, HUF 223 bln of six-month, and HUF 599 bln of twelve-month swaps at the value date on November 3.

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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