Excess reserves of banks amounted to HUF17.2bn on average in September, the National Bank of Hungary (NBH) commented on its balance sheet data. Excess reserves declined considerably m/m, in our opinion confirming arguments that their large increase was related to uncertainty related to the recent changes in the monetary policy framework. The level of excess reserves was still higher than the usual level, in our opinion, but this might be on account of carry-over effects and their level might normalize further in the next months. The total reserve requirement for the banks stood at HUF346.1bn in September, the NBH said. It added that forint liquidity in the banking system declined on a net basis in September. An increase in the three-month deposit stock was financed out of borrowing from the central bank, according to the NBH.
The only tender for the three-month deposit in September coincided with the maturity of EUR forex swaps for the forex loan conversion, narrowing banks’ forint liquidity, the NBH explained. The swap maturity was also one of the reasons for the decline of the NBH external assets, which fell by 1.0% m/m in September. The decline of external assets mostly affected international reserves and was also due to the appreciation of the forint, the NBH said.