January movements of Russian indices are in line with global market trends
The first half of January was positive for the Russian financial market, with prices in most of its segments rising amid favourable developments in international markets. However, the coronavirus outbreak in the second half of January entailed a decline in demand for high-risk assets on international exchanges and in oil prices, which affected the Russian market. These are the findings given in the new issue of the Banking Sector Liquidity and Financial Markets commentary.
The structural surplus of liquidity expanded, driven by a reduction in the amount of cash in circulation and an inflow of funds through the fiscal channel.
The spread between interbank lending rates and the Bank of Russia key rate changed only slightly. The spread remained relatively wide owing to liquidity inflows and increased demand for borrowings under Federal Treasury operations. Interest rates in the FX swap segment mostly stayed close to interbank lending rates as the banking sector’s foreign currency liquidity remained at a comfortable level.
The mortgage interest rate hit a new record-low in December 2019. Activity in retail lending continued to decline, dragged down by the further slowdown of growth in consumer lending associated with the tightening of the requirements for borrowers in 2019 Q4. Interest rates on long-term corporate loans resumed the downward trend in November 2019.