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Tender lowers ‘fine-tuning’ FX swap stock

The National Bank of Hungary (MNB) on Monday injected HUF 99.8 billion forint liquidity into the Hungarian banking system through its regular "fine-tuning swap tenders," where it offers one-month and 12-month forint swaps against euros.   

The tender will lower the total stock by HUF 50 bln to HUF 1.568 trillion as HUF 99.76 bln of six-month swaps and HUF 49.98 bln of one-month swaps will expire on the value date of the tender, noted state news agency MTI.

From Wednesday, the total stock of outlays will include HUF 106 bln of one-month, HUF 215 bln of three-month, HUF 73 bln of six-month, and HUF 1.174 tln of 12-month swaps.

On Monday, the offered amount for the one-month EUR/HUF FX swap tender was EUR 80 mln, or HUF 24.72 bln. Banksʼ bids totaled EUR 108 mln, or HUF 33.37 bln, of which the MNB did not accept any bids. 

For the 12-month tender the offered amount was EUR 242 mln, or HUF 74.77 bln. Banksʼ bids totaled EUR 1.27 bln, or HUF 392.38 bln, of which the central bank accepted EUR 323 mln, raising its original offer.

Three banks participated at the one-month tender and seven banks at the 12-month tender.

The central bank introduced the tenders for the FX swaps in the fall of 2016 as an instrument for managing market liquidity after it put a cap on placements in three-month deposits, its main sterilization instrument.  The MNB has said it continuously observes liquidity trends and stands prepared to hold further tenders for the instruments if it sees "substantial and lasting" deviations.