MNB lifts restrictions on closing FX swap contracts early

MNB

The National Bank of Hungary (MNB) said today it will allow lenders to close, before maturity, all unconditional FX swap contracts related to borrowers relief rebates and the mandatory conversion of retail FX mortgages into forints.

The MNB started allowing the early close of the FX swap contracts already in April, although it limited the volume to 20% of the total or €1.8 bln in absolute terms.

The MNB noted that its international reserves had grown even as the countryʼs short-term external debt fell, allowing it to make the option available to lenders. Allowing the FX swap contracts to be closed early will not affect the long-term path of the international reserves, the central bank said.

The MNBʼs international reserves stood at €36.645 bln at the end of April.

The MNB allotted last November about €6.39 bln of the swaps in an unconditional facility and an additional €1.66 bln in a conditional facility. The MNB said at the time that the amount would meet nearly all of banksʼ FX liquidity needs related to the conversion.

The MNB earlier agreed with banks to provide €9 bln from its international reserves to fully meet their FX liquidity needs related to the conversion, while lenders committed to acquire the necessary FX from the central bank rather than from the market.

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