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Surplus liquidity of banks grew further in March

Surplus liquidity of the banking sector continued to increase in March, as reflected in a rise in average holdings of two-week MNB bills to a new record high, the National Bank of Hungary (MNB) said on Monday in a release.

The previous all-time high of holdings of the two-week MNB bonds was in February, as a result of a rise of both liquidity in Hungary's banking sector and average central bank external assets on a $2 billion bond issue by the State of Hungary late January.

In March, the average stock of credit institutions’ overnight deposits also rose, after a decline in February. The overnight interbank rate fluctuated near the bottom of the interest rate corridor in March.

Average holdings of two-week MNB bills and the average stock of credit institutions’ overnight
deposits both rose, by HUF 237.1 billion to HUF 3,882.1 billion and by HUF 133.5 billion to HUF 209.9 billion respectively.

By contrast, the average of credit institutions’ outstanding swaps with the central bank fell by HUF 99.9 billion to HUF 235.3 billion.

On the assets side, the stock of external assets fell slightly, b HUF 60.5 billion to HUF 9,015.1 billion.

Average central government deposits with the MNB decreased by HUF 84.2 billion to HUF 1,305.2 billion, after rising by HUF 262.2 billion in February as the government deposited the proceeds of the USD bond on its accounts with the MNB. End-of-month figures showed that the government spent or converted into forints the bulk of the bond proceeds by the end of February.

As usual, the average of the banking sector’s current account balances with the MNB was only
slightly different in March from its reserve requirements, with the amount of excess reserves being HUF 700 million.

The overnight interbank rate fluctuated near the bottom of the interest rate corridor, except in
the second third of the month, when it approached the central bank base rate. The average stock of currency in circulation fell slightly relative to February, by HUF 19.7 billion to 2,157.6 billion. (MTI-ECONEWS)