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Demand for Hungary central bank three-month FX swap tender eases

The National Bank of Hungary (NBH) received and accepted €75 million bids for three-month floating rate EUR/HUF swaps as demand for the facility eased at the weekly tender on Monday.

Interest in the fx swaps dropped after heavy demand in the previous two weeks, parallel with the steep strengthening of the Swiss franc, in which a large part of the Hungarian retail loan stock is denominated, against the forint. The NBH allocating €140 million of the three-month swaps on August 8 and €255 million on August 15.

The NBH offered the usual maximum of €400 million three-month swaps at a maximum 203.03 swap points on Monday. In the absence of expiring swaps, the outstanding volume will rise to €1.432 billion on the August 24 settlement day, Econews calculated. On Wednesday the stock will reach its highest level since early February.

After a jump around the end of last year, demand for the weekly tenders subsided in the spring, before rising steeply again, reflecting uncertainties surrounding Greece, by late June. The renewed interest in August followed a backdrop for most of July.

The NBH started to offer three-month floating-price EUR/HUF swaps and six-month fixed-price EUR/HUF swaps to banks weekly in March 2009. The latter facility ran out as planned by the end of 2010. The bank also offered one-week CHF/EUR swaps weekly between February 2009 and January 2010.

The bank has been operating one-day FX swaps daily since October 2008. The swap facilities were launched to ease Hungarian banks' access to FX financing.