Bank of Russia suspended fiscal rule-based foreign currency purchases
In October, the structural liquidity surplus continued to decline as the Bank of Russia suspended fiscal rule-based foreign currency purchases in the domestic market. Liquidity outflow was partially offset as Russian constituents and the Federal Treasury expanded the depositing of temporarily available budgetary funds with banks.
The Russian financial market remained stable in October despite a certain decline in asset prices across most segments, notes the 32ndissue of ‘Banking Sector Liquidity and Financial Markets’, a Bank of Russia commentary. The Ministry of Finance resumed regular OFZ placement auctions; foreign investors emerged as net buyers in the stock market as of the month-end.
Interbank rates held close to the Bank of Russia key rate. Downward pressure was exerted by the operations of individual banks, which resulted in excess liquidity in the banking sector during the most part of the averaging period.
In the third quarter, rate and yield growth in the stock and money markets amid changing external conditions, coupled with the September key rate revision, drove higher rates in a number of segments of the credit and deposit market. The increase was moderate and the trends registered in the first six months of the year sustained through the third quarter (recovery in lending and substitution of FX transactions with ruble-denominated ones).