The forint started strengthening after a historic low on Wednesday following the central bank’s announcement of a tender for one-week deposits. The forint stood at 364.64 against the euro at 3.30pm after a historic low of 369.63 before 3pm. On the first day of trading this year, the forint was at 331.11 against the euro. The National Bank of Hungary (NBH) announced the launch of a tender for one-week deposits that pay the 0.90% central bank base rate.
The tender can “contribute to improving the efficiency of banking sector liquidity management and support a reduction in the stock of O/N deposits”, the NBH said. “The liquidity trends of the past weeks and the uneven distribution of liquidity between banks justifies the introduction of a liquidity sterilisation instrument,” it added.
The first tender for the one-week deposit will take place on Thursday, April 2. The tender parameters will be announced at noon. NBH rate-setters decided at a monthly policy meeting late in March to undertake a series of coordinated measures “to provide the required level of liquidity for all economic agents”. The central bank’s Monetary Council said they were ready to take further measures to provide additional liquidity to preserve effective monetary policy transmission.