Russian financial market stabilises
The 6th issue of the Financial Market Risks Review notes that the Russian financial market saw a decline in volatility in September 2018, on the back of optimism in emerging markets, growing oil prices, and the Bank of Russia’s decisions to raise the key rate and suspend foreign currency purchases in the domestic market.
Amid the improving risk situation, OFZ sales by non-residents were less pronounced in September vs August. In contrast with the OFZ market, non-residents’ share of investments in Russian eurobonds did not decline during or after the period of elevated volatility. According to a September 2018 survey of the largest credit institutions conducted by the Bank of Russia, no foreign currency liquidity shortage is expected in the remaining period of 2018 and in the first half of 2019.
In 2018, due to the increased cost of dollar-denominated borrowings, the market structure of US dollar-based interest rate derivatives has been changing, making it possible for domestic market participants to effectively hedge the risk of further dollar rate hikes.
In September 2018, after an elevated volatility period, there was slight growth in outstanding transactions in the financial market, which, however, failed to undermine the stability of both the creditors involved and the market as a whole.