The Central Bank of the Russian Federation has left the interest rates unchanged
At the same time, from June 18 the parameters of currency swap operations were changed: the interest rate on the ruble portion was reduced from 8% per annum to 6.5% per annum, while that on the foreign currency one, to 0% per annum (from 0.25% per annum on USD/RUB operations and from 1% per annum on EUR/RUB operations).
Thus, the cost of attraction of ruble liquidity against foreign currency as a security decreased by 1.25 p.p. and 0.5 p.p. as regards USD/RUB operations and EUR/RUB operations, respectively.
Such a measure of the Central Bank of the Russian Federation is aimed at making borrowings by commercial banks cheaper against foreign currency as a security. Due to a significant depreciation of the ruble exchange rate in May and early in June, banks' foreign currency assets increased. It is to be noted that foreign currency interventions by the Central Bank of the Russian Federation which prevented a dramatic drop in the ruble exchange rate caused a shrinkage of the monetary base. The above measure motivates banks to attract the required ruble liquidity from the Central Bank of the Russian Federation against available foreign currency funds as a security.
P.V. Trunin , PhD (Economics), Head of the Monetary Policy Department