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MNB in extraordinary FX swap tender to ease liquidity shortage

The National Bank of Hungary (MNB) provided EUR 463 million worth of forint liquidity to banks via an extraordinary one-week FX swap tender on Wednesday to ease a temporary liquidity shortage, news agency Reuters reported.

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Liquidity has dropped in the banking system because of corporate VAT tax payments due this week and a new retail government bond that was snapped up by households, pushing up interbank rates, Reuters reported. 

The MNB said that the one-week swap facility ensures the balance of liquidity processes until it matures next Wednesday, while it can also dampen an increase in short-term market rates. 

According to Reuters, the MNB had originally offered EUR 308 mln worth of swaps at the tender, and received bids worth EUR 1.337 billion from banks.