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Hungarian central bank's CHF/EUR facility extended

The Swiss National Bank (SNB), the European Central Bank, the Polish central bank and the National Bank of Hungary (NBH) will continue their EUR/CHF swap transactions, a tool for providing one-week CHF liquidity against euros to banks, at least until the end of October 2009, the NBH recently said on its website.

The new date marks the second extension of the lifetime of the facility, introduced in February and originally planned to run until the end of April. The first extension, announced in April, was until the end of July.

The four central banks will continue to operate the facilities to reach further improvements on the market for short-term Swiss franc funding, according to the joint announcement.

The NBH and the Swiss National Bank (SNB) announced the establishment of a temporary EUR/CHF swap arrangement under which the NBH would provide Swiss franc funding to local banks in the form of FX swaps late in January. The one-week swap facility, operated weekly with an upper limit of €5 billion, has been running since February 2.

The amount currently outstanding, which expires on July 1, is €380 million, and will drop to €155 million, the lowest level since the facility has been in operation, after Monday's tender on July 1. The amount of euros swapped for Swiss francs in the facility peaked at €654 million on April 14. (MTI-ECONEWS)