On FX repos
The Bank of Russia decided to introduce a new instrument — FX repo — starting from 27 October 2014. The purpose of this instrument is to further expanse of credit institution ability to manage their short-term foreign exchange liquidity. The Bank of Russia set the aggregate amount of FX repo operations equal to USD50 billion for the period until the end of 2016.
FX repos will be held weekly at the MICEX Stock Exchange in US dollars and euros in the form of one-week and
Minimum interest rates for repos in US dollars and euros will be equal to Libor rates in the corresponding currencies for the comparable terms plus 2.00 and 2.25 percentage points for one-week and
Eligible Russian credit institutions should belong to the 1 and 2 classification groups1 and suppose to sign a special supplementary agreement to the General Agreement on General Conditions of Repo Transactions between the Bank of Russia and a Credit Institution at MICEX Stock Exchange. The starting date for signing of such supplementary agreements is the 20 of October 2014. The form of Supplementary agreement will be published on the Bank of Russia website.
The Bank of Russia intends to conduct the first
Information on provisional transaction rules and discounts on the prices of securities eligible as collateral will be published on the Bank of Russia website.
Provision of foreign currency liquidity through repos and USD/RUB sell/buy FX swaps by the Bank of Russia will contribute to smoothing spikes rise in volatility of the ruble exchange rate, which can originate due to short-term increase in demand for foreign currency from market participants.
1 In accordance with Bank of Russia regulations setting criteria for assessing the financial standing of credit institutions.
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