Rising global demand for risk assets drives improvement in domestic financial markets
Russian financial markets were on a much surer footing in January. Investor sentiment gained a boost from softening US Federal Reserve rhetoric over forthcoming monetary tightening, the advances in US-China trade talks, and oil prices with Brent upwards of $60 a barrel, according to the 35th issue of the commentary’ Banking Sector Liquidity and Financial Markets’.
The structural liquidity surplus dropped last month to 2.7 trillion rubles as budget-channel funds saw a seasonal outflow. Short-term interbank rates were close to the Bank of Russia key rate, with the spread between them slightly negative. The forex liquidity position remained strong. The resumed fiscal rule-based purchases of foreign currency had no major implications for either forex liquidity or ruble exchange rate movements.
Household deposits continued to grow in December through January as the rise in deposit rates sustained. Banks’ lending to the economy continued to expand, led by the retail market segment.