Large Russian banks cut back on OFZ buying in Jan, says central bank

A view shows Russia's Central Bank headquarters in Moscow
A view shows Russia's Central Bank headquarters in Moscow, Russia February 22, 2018. REUTERS/Sergei Karpukhin/
  • This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine

MOSCOW, Feb 16 (Reuters) - Large Russian banks' share of government debt purchases dropped to 59.5% in January, the central bank said on Thursday, down from 90.7% towards the end of 2022, as the finance ministry stopped issuing floating-rate bonds popular with lenders.

Russia borrowed 2.92 trillion roubles ($39.1 billion) in November-December last year, in a spree dominated by floating-rate bonds, known as 'floaters', as Moscow sought to divert funds to its military campaign in Ukraine.

In January, 209.5 billion roubles ($2.8 billion) in OFZ bonds were issued, with the majority having fixed-rate coupons.

The bank said that foreign currency sales during January had a stabilising effect on Russia's foreign exchange markets and helped smooth currency volatility.

Russia started sales of its foreign currency reserves after a months-long hiatus in January to cover a budget deficit triggered by falling oil and gas revenues.

Even as December's volatility has subsided, the rouble has continued weakening in 2023, with trading volumes at their lowest for several years, the bank said.

"At the same time, the lower supply of foreign currency from the largest exporters compensated for a fall in FX demand on the part of other participants," the central bank said.

The bank observed a 31% drop in the volume of investments in foreign securities in 2022, down to 1.18 billion roubles from 1.70 billion roubles, part of a "de-dollarisation" drive encouraged by the authorities, as Russia seeks to wean itself off "unfriendly" currencies - those of countries that have imposed sanctions.

"In conditions of high sanctions risks, including those associated with "toxic" currencies, in 2022 citizens revised the foreign currency structure of their savings," the bank said.

($1 = 74.7000 roubles)

Reporting by Alexander Marrow and Elena Fabrichnaya; Editing by Emelia Sithole-Matarise and Mark Potter

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