Central Bank introducing 12-month FX repo deals, limit at first auction to be $10 bln
MOSCOW. Nov 5 (Interfax) - Russia's Central Bank is introducing 12-month forex repo deals starting on Wednesday, November 5, the bank said on its website.
The Central Bank also decided to lower the minimum rates on all forex repo deals, including on one-week, 28-day and 12-month deals, to the LIBOR rate in the corresponding currencies and for the corresponding periods plus 1.5 percentage points starting November 5.
The previous rates on dollar- and euro-denominated repo deals were set at Libor + 2% and Libor +2.25% for periods of one week and 28 days, respectively.
The first one-year forex repo auction will take place by mid-November. The assumed limit at the auction will be up to $10 billion.
The largest banks have been asking the Central Bank for several months to introduce 12-month FX repos in order to compensate for closed foreign capital markets.
The 12-month FX repo deals will be held monthly in the form of auctions on the MICEX stock index. Payments will take place on the second working day after the date of finalization.
Securities included on the Central Bank's Lombard List will be accepted as guarantees on the 12-month repo deals. This does not, however, include the shares or securities of financial organizations. These deals will be carried out with Russian credit institutions that are considered in the first or second classification group and that have signed a supplementary agreement to the general agreement with the Central Bank on the overall conditions for carrying out REPO deals on the MICEX index.
The first forex REPO deals took place in late October, but banks' demand for currency from the Central Bank was weak due to unattractive prices. The regulator said it intended to carry out more one-week and 28-day auctions by the end of the year with a limit of $2 billion and $1.5 billion, respectively.
The Central Bank has maintained the previously set maximum volume of banks' debt on all forex repo deals at $50 billion for a period up to end-2016. The limit might be increased if needed, the Central Bank said.