Cbank says Russian banks have no systemic foreign currency crunch

MOSCOW, Oct 14 (PRIME) – There were no signs of a systemic deficit of foreign currency with Russian banks in September, while a jump in the U.S. dollar debt price on September 30 was temporary and happened due to European banking system’s problems with Deutsche Bank, the central bank said in a report Friday.

“In general, the situation with the foreign currency liquidity in September 2016 remained quite favorable. Demand for foreign currency on the internal market was only demonstrated by several banks, which shows the lack of a systemic deficit of foreign currency liquidity in the Russian banking sector,” the regulator said.

Only on September 30, when “the U.S. dollar jumped on the European currency market due to Deutsche Bank’s problems,” the ruble fell below the interest rate corridor of the central bank in currency swap operations. Some large banks continued to attract large U.S. dollar volumes from the market, and foreign banks increased ruble-denominated ñrediting on the currency swap market, the regulator added.

Moreover, ruble volatility was low in September despite oil price fluctuations due to an uninterrupted offer of foreign currency by exporting companies and a low demand for foreign currency. The market participants expect that the low volatility of the ruble’s exchange rate will be maintained in October.

The central bank plans to continue to absorb excessive liquidity from the market through deposit auctions, but a switch to a structural surplus of liquidity in early 2017 will not lead to any changes in condition of Russia’s monetary system.

In the report, the regulator also said that inflationary expectations of the Russian market are still above the central bank’s inflation target of 4%, meaning it will take more time to push the expectations to below 4%.

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