Forint liquidity of Hungary's banking sector rose slightly in June, reflected mainly in an increase in lenders' deposits and a decline, close to nil, in central bank swap claims on lenders, the National Bank of Hungary (MNB) said in its monthly preliminary statistical balance on Thursday.
Average stock of overnight deposits rose by HUF 111.6 billion to HUF 274.7 billion in June from the previous month. Average stock of two-week MNB bills increased HUF 136.3 billion to HUF 3,580.9 billion for residents but dropped a sharper HUF 202.6 billion to HUF 437.1 billion for non-residents. Swap claims dropped by HUF 8.3 billion to just HUF 3.5 billion. In the previous month, the claims plunged by more than HUF 154 billion. Average stock of currency in circulation was up HUF 34.0 billion at HUF 2,694.4 billion in June. Average external assets were HUF 179.6 billion higher at HUF 10,760.8 billion.
Average deposits of the central government rose by HUF 125.6 billion to HUF 1,762.3 billion, in spite of the repayment on June 29 of almost HUF 83 billion on a loan from the International Monetary Fund that Hungary took out in 2008, at the height of the global financial crisis. The effect of the repayment was offset by European Union transfers and revenues from taxes and contributions, the MNB explained.
The MNB said it allocated €36 million to lenders for the conversion of non-performing foreign currency-denominated loans between May 15 and June 15.
Under an agreement between the government and banks at the end of last year, lenders were required to allow borrowers more than 90 days behind on repayments on their FX loans to convert them into forint loans and at the same time write off a quarter of their value.
The MNB conducted the euro sales between May 15 and June 15 to reduce market demand for foreign currency and prevent potential adverse effects on the economy. Borrowers signalled their intention to convert €132 million of FX loans under the programme, an amount the MNB used as its cap for the euro sales. The amount was about 30% of the total €438 million non-performing stock of FX loans.