Forint liquidity of the banking sector rose in June, reflected in an increase in banks’ overnight deposits at the central bank, National Bank of Hungary (NBH) balance sheet data showed. The average stock of overnight bank deposits rose by HUF252.1bn and offset the reduction in the three-month deposit, driven by the NBH-imposed limit. The end-month volume of three-month deposits amounted to HUF500bn in June, in line with the limit. As we reported, the MPC reduced the ceiling further to HUF300bn as of end-Q3, which was explained with the need to maintain the already achieved loose monetary conditions. Banks’ excess reserves amounted to HUF3.6bn, which was a relatively normal and low level compared to the total reserve requirement of HUF187.3bn.
The average stock of NBH external assets was down by 1.0% m/m to HUF7,903.1bn in June. The decline was on account of expiration of forex swaps related to the forex loan conversion as well as exchange rate fluctuations, the NBH explained. On the liability side, the general government deposit at the NBH also fell by 11.7% m/m, reflecting payments for EU-funded projects.