On the conduction of 1-week deposit auction

The Bank of Russia has decided to conduct on 9 August 2016 1-week deposit auction with the following parameters:

The auction conditions are available at the page “Conditions of the Bank of Russia deposit and credit transactions on an auction basis for a period of 1 week”.

The Bank of Russia will release the information on the results of the auction or on rendering it invalid until 13.30 Moscow time.

The conduction of the deposit auction instead of the repo auction is caused by expected liquidity inflow into the banking sector through the budget channel in early August. Under these conditions the demand for liquidity fell, the supply of liquidity increased. Consequently the preservation of the structural liquidity deficit is attended by short-run liquidity surplus in the banking sector. The conduction of the 1-week deposit auction will allow the Bank of Russia to absorb the said surplus and create conditions for keeping the short-term money market rates close to the key rate.

Over the course of the next months the probability of short-run liquidity surplus and conduction of deposit auctions will decrease in view of the seasonal trends in currency in circulation and budget flows as well as an increase in banks’ liquidity needs due to the decisions taken in June 2016 on the required reserves ratios lift. Nevertheless till the end of 2016 there may arise a need to conduct not only liquidity provision but also liquidity absorbing weekly operations in case of significant change in the developments of the mentioned factors. In this case the information on the conduction of the 1-week deposit auction instead of the 1-week repo auction will be published on the preceding day.

The Bank of Russia conducts deposit auctions in accordance with the Bank of Russia Regulation No. 404-P, dated 9 August 2013, “On Conducting Bank of Russia Deposit Operations with Credit Institutions”.

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