Hungary's Central Bank Launches Tool to Drain Liquidity After Ending Rate Hikes

Hungary's central bank accepted 2.093 trillion forints ($4.90 billion) worth of bids from banks at its first floating-rate two-month deposit tender on Wednesday as part of its efforts to drain forint liquidity and tighten monetary conditions further, Reuters reported. The National Bank of Hungary (NBH), which ended its cycle of rate hikes last month taking the base rate to 13%, has said it would deploy an array of tools to tighten liquidity conditions from this month, including the new deposit instrument. "With today's deposit tender, the NBH starts a marked tightening in liquidity and thus continues monetary tightening," the bank said in a statement, adding it would hold a similar deposit tender next Wednesday. The bank said its tightening drive could drain liquidity faster than previously expected. The forint, which has been central Europe's worst performing currency this year, sliding over 12% versus the euro, firmed to 421 from around 423 after the tender, moving away from record lows at 426 hit on Monday. It has been pressured by a surging dollar and the Hungarian economy's vulnerabilities, such as a widening current account deficit. Read more.