Hungary’s retail banks have bought €980m from the central bank at the market rate of 305.45 forints to a euro in a tender with the aim to refund households.

This amounts to nearly one-third of the €3bn which the Hungarian central bank has earmarked for spending from its €35.68bn end-September foreign-currency reserves.

The tender is targeted at enabling banks to compensate households for foreign-currency loans which were deemed unfair by courts.

By using a portion of the foreign-currency reserves of the country, the central bank intends to prevent weakening of the Hungarian currency in case banks turn to the open market to meet their foreign-currency requirements.

Recent legislations require banks to refund household borrowers part of foreign-currency loans, mostly mortgages, they took over the past 10 years.

Out of the €980m, demand was €750m for an unconditional facility versus the €1bn on offer.

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Demand for rest of the €230m was for a conditional facility versus €2bn on offer, with the conditional facility requiring banks to use half of the amount they buy to pay off short-term external debt.