CBR announced additional support for banking sector; Minfin started FX sales

RUSSIA ENERGY / FINANCE - In Brief 17 Dec 2014 by Marcel Salikhov
Most important news for today came from Minfin and CBR. Minfin announced that it started to sell FX on the spot. In 1H14 CBR bought about $6 bln as a part of operations associated with accumulation of sovereign wealth funds. Since June there’s operation for Minfin by CBR. Overall amount of FX sales will be included to the daily FX interventions published by CBR. We see it as a welcome step to commit words about RUB ‘undervaluation’ with action. But limited in size Minfin sales will not have major market impact without additional CBR support. Then CBR published set of measures to maintain ‘stability of the Russian financial sector’. They include different initiatives aimed to reduce regulatory impact of weaker RUB and increased key rates on banks’ books. Banks will be allowed not mark to the market their securities portfolios and one quarter lagged FX rate will be used for ‘marking’ assets and liabilities in foreign currency. Requirements limiting credit interest rates for households and floor and limits on deposit rates will be also eased. CBR also pledged to increase support of providing FX to the markets. FX market reacted to the news and to growing oil prices RUB restored its’ yesterdays plunge and returned to the closing levels of Monday, 15th. A lot of attention will turned to the press-conference of President V. Putin tomorrow. But it appears that next bullet of policy measures was shot today and there will be no unexpected announcements on financial matters tomorrow. But we would see change in foreign policy rhetoric as a positive sign.

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