The Bank of Russia from December 23 to increase the rate for buying dollars for rubles, establishing it at the level of Libor (the interest rate on interbank lending, which is calculated by the ICE exchange). The cost of raising currency for rubles to banks will increase from 0 to 0.68% (Libor on December 16, on loans for one day amounted to 0.68% per annum). Rate on operations “a currency swap” (exchange of rubles for dollars) for banks providing dollar liquidity will grow by 1.5 percentage points to 0.68%.
Thus, the regulator will be to buy dollars and euros cheaper than sell them to banks. The Central Bank noted that the new rates are set taking into account changes on domestic and foreign markets. As the chief economist of “Renaissance Capital” Oleg Kuzmin, the controller simply follows the interest rates in foreign markets, which began to rise after the fed’s rate hike. 14 December operations Committee on the open market (FOMC) U.S. Federal reserve raised its key interest rate to 0.5, 0.75%, follows from data on the regulator’s website. “The Central Bank simply equates to the market rate, because he has no incentive to give banks cheap funding currency,” — said Kuzmin.
He recalled that in 2014, the Central Bank also used the operation “a currency swap” to provide banks with liquidity, but due to the high rates they were not popular. “Now with the increased demand for currency from banks, the Central Bank simply makes the provision of liquidity,” the economist said. Thursday, December 15, the Central Bank recorded the highest volume of deals with banks to buy dollars for rubles — at $3 billion, Central Bank Head Elvira Nabiullina has linked an increased demand of banks for currency with the seasonal factor. “We increased the demand associated with the market reaction to the Federal reserve’s decision to increase rates and the seasonal increase in demand for such tools, which usually occurs at the end of the month. Already today shows that such a demand is high there,” she said (quoted by “RIA Novosti”).
However, she said that the situation with monetary liquidity “absolutely normal.”
Market participants interviewed say that the market from mid-December there has been increased demand for the currency. “This is not surprising, given the upcoming spending budget, part of these funds will be used for the purchase of dollars and euros, and another of external debt”, — says analyst “Discovery Broker” Andrei Kochetkov. According to him, the situation with monetary liquidity is influenced by the activity of nonresidents, who at the end of the year of record profits by selling rubles. “The regulator stimulates the demand for currency, because no one is interested in a very strong ruble,” he adds.
The Treasurer of the Bank from top-10 notes that a shortage of currency to test primarily the big banks. “The market is experiencing volatility. Rate swap during the day ranges from 6-7% to 10% per annum, which suggests that currency is not enough,” he said. Another Treasurer of a major Bank believes that by raising rates for the provision of foreign currency to banks, the regulator is trying to discourage the carry trade. “There are concerns that the banks can buy the currency Eurobonds, which are to deliver non-residents”, — he said.
Oleg Kuzmin believes that the situation with the currency shortage will last until Jan. “In these circumstances, the Central Bank, of course, could raise the rate on the swap two weeks later, but apparently the Central Bank had to obtain additional income,” he says. The expert also noted that the regulator can, if necessary, to increase the limits of provision of foreign currency liquidity. The Central Bank indicate that, if necessary, limits on transactions “a currency swap” can be increased.