Hike in reserve-ratio requirement makes weekly deposit auctions in fall less likely - CBR
MOSCOW. July 11 (Interfax) - The increase in the reserve-ratio requirement will have an impact on the banking sector's demand for liquidity by August and September 2016, the Central Bank said in a report on liquidity in the banking sector and financial markets.
"The decision to increase the reserve-ratio requirements reduces the likelihood that the weekly deposit auctions will be held by the Central Bank in the fall months of 2016. The change in the reserve-ratio requirement will smooth the shift to a liquidity surplus, which continues to be expected in the beginning of 2017 against the backdrop of a significant seasonal inflow of liquidity to the banking sector," the Central Bank said.
The Central Bank approved hikes in the reserve-ratio requirements on two occasions in June: it increased the ratio by 1 percentage point for FX-denominated liabilities and then raised the ratio for ruble- and FX-denominated liabilities by 0.75 pps. Together "the need to support the additional resources on accounts at the Central Bank will increase bank demand for liquidity by 0.4 trillion-0.5 trillion rubles," the Central Bank said.
In the next few months, the inflow of funds along the budget channel will continue, which will lead to further decline in bank debt on refinancing operations in July, it said.
The current money market rate situation within the Central Bank interest rate corridor may persist in July, it added.