8 December 2020
The Magyar Nemzeti Bank will hold foreign exchange swap tenders providing euro liquidity at the end of 2020. The purpose behind the announcement of the facility at the end of 2020, already used successfully in September, is to ensure that changes in short-term yields continue to be in line with short-term yields deemed optimal by the Monetary Council in every sub-market at all times. The tenders MNB will be announced without a quantitative limit. The Bank may use its international master repurchase agreements to finance the tenders.
Consistent with the Monetary Council’s decision on 8 September 2020 and to ensure that changes in short-term yields continue to be in line with the short-term yield deemed optimal by the Monetary Council at every sub-market at all times, the Magyar Nemzeti Bank will conduct foreign exchange swap tenders providing euro liquidity at the end of December.
The tenders will take place on 21, 29, 30 and 31 December 2020. The first tender’s starting value date will be 23 December, and the other three tenders’ starting value date will be 31 December. The maturity date of all four tenders will be Thursday, 7 January 2021. The tenders will be announced with no quantitative limit. The Bank may use its international master repurchase agreements providing euro liquidity to finance the swap instrument.
The announcement containing the parameters of EUR/HUF foreign exchange swap tenders of 21, 29 and 30 December 2020 will be published on the Bank’s and agencies’ websites at 8 am and that of the 31 December tender at 11 am on the day of the tender. A notice on the swap facility providing euro liquidity is available at the following link: Notice.
Swap tenders providing forint liquidity will not be held between 21 and 31 December 2020. The MNB does not consider a sustained reduction in outstanding swaps necessary to handle swap market tensions potentially arising at the end of the quarter. The MNB is ready to provide the banking sector with the forint liquidity missing due to tenders dropping out at the end of the quarter by holding swap tenders in the subsequent quarter, in view of market quotes and bids.
On 8 September 2020, the Monetary Council decided to use swap tenders providing central bank foreign currency liquidity, if necessary, in addition to the regular announcement of the swap facility, to improve the effectiveness of monetary policy transmission. In September, the MNB conducted four foreign exchange swap tenders providing euro liquidity to manage tensions in the swap market at the end of the quarter. The tenders met the objectives set by the Monetary Council, as swap quotes were smoothed and the market was stabilised.