Non-residents’ presence in Russian market stabilises in July

Net capital outflow from emerging markets declined in July 2018. This largely stabilised capital flows in the Russian market. The July issue of the Financial Market Risks Review notes that the share of OFZ in the accounts of foreign depositaries with the NSD remained virtually unchanged in July.

As external conditions stabilised, the placement amount of sovereign debt securities has returned back to normal. At the same time, the Ministry of Finance has revised domestic borrowings upwards in its plans for the next few years. The Bank of Russia estimates that domestic investors’ demand will suffice for raising the planned funding even without non-residents’ active involvement.

The law adopted at the end of July 2018 that eases capital repatriation regime for the residents affected by sanctions will not have a considerable effect on sales of export revenues and the situation in the domestic FX market. Exporters will sell most of their FX revenues to make necessary ruble payments even if they are not obliged to repatriate their capitals. Thereby, softer FX regulation poses no additional risks for the Russian FX market.

In July 2018, the Bank of Russia updated the scale of elevated risk ratios on consumer loans to curb banks’ excessive activity in the unsecured consumer lending segment. These measures are aimed at mitigating the risk of an excessive debt burden of households and enhancing the financial system’s resilience.