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MNB raises forint liquidity via swap tender

The National Bank of Hungary (MNB) allotted HUF 50 billion of one-month swaps against euros at a tender on Monday, raising forint liquidity by HUF 36.7 bln, according to data released by the central bank and cited by state news agency MTI.   

With HUF 13.3 bln of one-month swaps expiring, the tender raises the total swap stock by HUF 36.7 bln, to HUF 1,312.4 bln.

The tender was the fifth since central bank policy-makers 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."

The MNB offered HUF 25 bln of one-month and HUF 25 bln of three-month EUR/HUF swaps on Monday. Demand focused on the one-month swaps, where the central bank accepted HUF 50 bln of the HUF 93. 7 bln bids it received. It refused the HUF 12.3 bln bids arriving for the HUF 25 bln three-month swaps on offer.

Similarly to the previous tender on October 16, the MNB did not offer either six or twelve-month swaps at the Monday tender.

The total swap stock will now comprise HUF 216 bln of one-month, HUF 324 bln of three-month, HUF 273 bln of six-month, and HUF 500 bln of twelve-month swaps at the value date on October 25.

The central bank introduced the tenders for the FX swaps last autumn as a "fine-tuning instrument" for market liquidity after it put a cap on placements in three-month deposits, its main sterilization instrument.