Press Service

The Central Bank of the Russian Federation (Bank of Russia)

Press Service

12 Neglinnaya Street, Moscow, 107016 Russia;

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 28-day auctions. Settlements will be carried out on the second business day following the date of transaction. All securities included in the Bank of Russia Lombard List, excluding equities, can be used as collateral for these transactions.

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 28-day transactions respectively.

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 28-day and one-week US dollar repo auction on 29 October and 30 October 2014 respectively. The potential action amount is USD1.5 billion for 28-day auction and USD2.0 billion for one-week auction. The exact parameters of these auctions will be published the Bank of Russia website on 27 October 2014. Afterwards, 28-day and one-week auctions will be further conducted weekly on Wednesdays and on Thursdays respectively. Information on the auction parameters, including the amounts, will be published on Mondays the same week.

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.

16 October 2014

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