MNB allots combined HUF 200 bln of EUR/HUF swaps at tender

MNB

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The National Bank of Hungary (MNB) allotted HUF 100 billion of one-month and HUF 100 bln of three-month forint swaps against euros at tenders yesterday, the central bank said, according to wire service MTI. Mondayʼs was the first three-month EUR/HUF swap tender. 

The MNB introduced the FX tenders, launched as a "fine-tuning instrument" for market liquidity last October on one-week, one-month and three-month maturities. However, it has been operating the facility almost exclusively for one-month swaps up to this point, except for one one-week swap tender at the turn of the year. On March 29, however, rate-setters decided to extend the range of the swaps, adding six and 12-month facilities.

Yesterday the MNB initially offered a total of EUR 160 million or HUF 50 bln of three-month EUR/HUF swaps. Bids from the ten banks participating in the tender came to EUR 1.170 bln (HUF 362 bln), of which the central bank accepted HUF 100 bln. The value date of the swaps is April 5, and they will mature on July 5. 

The bank also offered EUR 485 mln (HUF 150 bln) of one-month EUR/HUF swaps expiring on May 3. Bids from nine banks totaled EUR 832 mln (HUF 257 bln), of which the MNB accepted HUF 100 bln. 

With EUR 645 mln (HUF 200 bln) of one-month swaps maturing on April 5, the additional liquidity the MNB introduced to the system through the tenders will remain unchanged at HUF 550 bln.

The next swap expiry, of HUF 200 bln in one-month swaps, will be on April 12.

The MNB launched the FX swap tenders after it put a cap on placements in three-month deposits, its main sterilization instrument, in the fall of 2016. It said it is continuously observing liquidity trends and stands prepared to hold further tenders for the instruments if it sees "substantial and lasting" deviations.

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