Forint liquidity of the banking sector increased in March, the National Bank of Hungary (NBH) released its balance sheet data for the month. The increase in bank forint liquidity was observed through an increase in banks’ overnight deposits at the NBH, which offset a decline in other deposits. Banks’ excess reserves amounted to HUF 25.9bn, which was a similar amount to the previous month but excess reserves have remained elevated since late 2017-early 2018. The total reserve requirement of the banking sector amounted to HUF 222.8bn.
The average stock of the NBH external assets rose by 0.7% m/m to HUF 9,198.8bn in March. The end-of-month stock, however, rose at a much more pronounced pace, which was to an equal extent due to revaluation effects and transactions. The NBH did not explain the increase in external assets but we think it might be partly related to EU fund flows. The average stock of government deposits in the NBH rose by 0.8% m/m to HUF 1,562.2bn in March, in our opinion signalling high positive net debt issuance during the month.