July Statistical Balance Sheet by the Central Bank

The average and end-of-month stocks of external assets increased in July, the National Bank of Hungary (MNB) reports.

The increase was primarily the result of the EUR-denominated government bond issuance by the Government Debt Management Agency, changes in the forint exchange rate, and the decrease in the stock of swaps providing euro liquidity concluded with credit institutions, which was partly offset by the decline in foreign liabilities arising from repo transactions.

The average stock of currency in circulation declined during the month. The balance of the banking system’s reserve accounts was HUF 7,237.2 billion in July, reflecting an excess reserves holding of HUF 4,495.4 billion compared to the required reserves amount of HUF 2,741.8 billion.

Forint liquidity of the banking sector decreased in July, reflecting a fall in the average stock of credit institutions’ current account deposits and a smaller-than-previous increase in the average stock of bills issued by the MNB. The average stock of central government deposits increased significantly during the month.

The average stock of foreign liabilities also increased in July. The Monetary Council reduced the base rate by 25 basis points to 5.75%, effective from 22 July. The overnight collateralised central bank lending rate, representing the upper bound of the interest rate corridor and the interest rate on overnight central bank deposits, which is considered as the lower bound of the interest rate corridor was also reduced by 25 basis points, to 6.75% and 4.75%, respectively. The average overnight interbank lending rate (HUFONIA) fluctuated close to the base rate throughout the month.