The Bank of Russia has announced that it will resume one-month repo auctions starting from November 25, 2024, through March 3, 2025. These auctions will be held weekly according to an approved schedule.
According to the Bank of Russia, "the conditions and main parameters of the auctions remain unchanged." Credit institutions with master agreements concluded with the Bank of Russia are eligible to participate. The minimum interest rate is set at the key rate plus 10 basis points. If there is a change in the key rate, the interest rate on concluded repos will adjust accordingly. Collateral accepted includes federal government bonds and bonds from constituent territories of the Russian Federation and municipalities with the highest credit rating.
The decision to resume these auctions is due to expectations of uneven liquidity distribution among banks caused by growing fiscal flows at year-end. The bank notes that "budget operations are characterised by a time gap between the accumulation of revenues, offering of government bonds and incurrence of expenditures." By providing funds under reverse transactions as part of these repo auctions, the Bank aims to address temporary imbalances.
The maximum amount of funds available at each auction will depend on current and forecasted liquidity in the banking sector. The Bank anticipates demand for these transactions to peak towards the end of 2024. From February 2025, it plans to gradually reduce funds provided at each auction, aiming for debt under these transactions to drop to zero by the end of Q1 2025.
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