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Tender raises ‘fine-tuning’ FX swap stock to HUF 1.455 tln

The National Bank of Hungary (MNB) injected a gross HUF 100 billion or net HUF 50 bln forint liquidity into the Hungarian banking system through its "fine-tuning swap tenders" yesterday, where it offered one-month, three-month and 12-month forint swaps against euros.   

The tender will raise the total stock by HUF 50 bln to HUF 1.455 trillion as a combined HUF 50 bln of the swaps -HUF 25 bln of one-month and HUF 25 bln of three-month swaps -will expire on the value date of the tender on Wednesday.

From Wednesday, the total stock of outlays will include HUF 84 bln of one-month, HUF 125 bln of three-month, HUF 173 bln of six-month, and HUF 1.074 tln of 12-month swaps. 

Yesterday, only HUF 2.9 bln bids arrived from banks for the offered HUF 25 bln (EUR 79 mln) of one-month EUR/HUF swaps, which the MNB refused. No bid was submitted for the similar volume of three-month swaps on offer.

The MNB accepted, in contrast, HUF 118 bln in bids for the HUF 100 bln (EUR 319 mln) 12-month swaps it offered and allocated. The MNB did not invite bids for the six-month maturity.

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