The Central bank of Russia (CBR) said it is raising reserve requirements for FX liabilities of local banks by 1 percentage points starting on July 1, 2016 to decrease the FX exposure of the banking system. The CBR has been concerned about prevailing excess liquidity during last months and is expanding its liquidity absorption tools for better money market rate control.
The CBR is also returning to previously used short-term bonds – OBRs. According to the central bank, OBRs, zero-coupon discount bonds, may have tenors from several months up to one year and be traded on the secondary market which is accessible by resident credit organisations only.
Russia’s central bank cut its key rate on June 10 by 50 basis points to 10.5. If the current trend in oil prices goes on and inflation expectations continue to fall on stable RUB, it is likely to support further gradual rate cuts in 2016. The CBR has recently absorbed abundant liquidity from the interbank market and has gained more room for additional key rate cuts later this year.
“The CBR’s tone softens further, adding optimism to economic prospects. We expect gradual rate cuts to continue in 2016,” said Danske Bank in a report.
The material has been provided by InstaForex Company – www.instaforex.com