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Banking sector free liquidity barely changed in January

Free liquidity in Hungary's banking sector barely changed in January, as banks reduced one-day deposits and raised their two-week bond and MNB swap stocks by a similar amount, the preliminary statistical balance sheet of the National Bank of Hungary (MNB) published on Friday showed.

Free liquidity in the banking system dropped last October for the first time since March, was little changed in November and rose slightly in December.

Both the average holdings of two-week MNB bills and the average liabilities and receivable on central bank’s outstanding FX swaps with credit institutions rose in January. The stock of two-week MNB bonds rose HUF 80.5 billion to HUF 3443.4 billion, and that of FFX swaps outstanding rose by HUF 14.5 billion to HUF 362.8 billion.

The average stock of credit institutions' overnight deposits with the central bank fell by HUF 90.1 billion from December to HUF 103.5 billion. The drop was similar to the combined rise in two-week MNB bonds and swaps.

The average stock of deposit held by the government with the MNB, rose HUF 183.2 billion from December to HUF 1,127.2 billion.

On the assets side of the balance sheet, the average stock of external assets fell a slight HUF 5.5 billion.

Average total assets fell HUF 25.6 billion to HUF 9,412.7 billion. Banks had no obligations to the central bank on either two-week or on six-month loans, similar to December, showing they did not tap either collateralized-loan facility, operated by the MNB since October 2008.

As usual, the average of the banking sector’s current account balances with the MNB only slightly differed from their reserve requirements, exceeding the latter by a mere HUF 800 million.

In a change from the previous trend, the overnight interbank lending rate fluctuated around the central bank base rate - its pre-crisis equilibrium level - instead of staying close to the bottom of the interest rate corridor, the MNB noted. The change suggests a pickup in interbank borrowing.

The average stock of currency in circulation fell in a seasonal drop, dropping HUF 97.3 billion from December to HUF 2,171 billion. (MTI-Econews)