The fall came after a €2 bln repayment late in the month on a loan Hungary took out from the European Commission in 2008, at the height of the financial crisis. The reserves may also have been affected by a programme launched by the central bank to provide lenders with foreign exchange necessary to refund retail clients under borrowers’ relief legislation approved in the summer.
The MNB initially made €3 bln from its international reserves available under the programme, launched late in September. In the three tenders held in October, it allotted a combined €980 mln to banks. The MNB said on Tuesday that it would make €9 bln available to lenders to support the phasing out of all retail FX loans, planned to be carried out by the government next year. The central bank intends to reach a formal agreement with banks on using the the euros from the reserves instead of turning to the market.
The MNB is stepping in in order to smooth the process and limit the impact on the forint’s exchange rate. The international reserves were up €1.461 bln at the end of October from 12 months earlier.
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