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In July, the volume of foreign currency liquidity of Russian banks fell to zero, analysts at Raiffeisenbank estimated. A similar situation was in 2018, but then clients were withdrawing the currency due to the threat of sanctions, and now banks are parting with it themselves

In July, Russian banks lost their entire available reserve of foreign exchange liquidity: as of August 1, the indicator became negative, according to a review by Raiffeisenbank. The currency deficit in the system amounted to $ 0.2-0.3 billion, the bank analyst Denis Poryvai estimated in a conversation with RBC. Over the past month, the indicator decreased by about $ 5 billion, and since the beginning of the year – by $ 15.5 billion. The deficit of foreign exchange liquidity in the banking sector was recorded for the first time since September 2018.

“We can say that the state is still borderline, zero. This indicates that there is no excess foreign exchange liquidity in the local market, on the one hand, and on the other hand, it signals that there will be no changes for the better by the end of August, ”notes Poryvai.

The Bank of Russia confirmed that in July the banking sector experienced a decrease in foreign exchange liquidity reserves. However, there it is associated with seasonal factors.

How did the currency shortage come about?

According to Raiffeisenbank’s estimates based on Central Bank data, in July, Russian banks have significantly increased their foreign currency lending, issuing loans to customers for $ 3.7 billion. This is “atypically large” in the face of a decline in foreign currency lending in Russia, analysts say. At the same time, the inflow of customer funds in foreign currency was modest – about $ 0.6 billion. As a result, an outflow of foreign currency liquidity in the amount of $ 3.1 billion was formed on credit and deposit operations.

The situation was also influenced by the banks’ own operations. As noted in the review of Raiffeisenbank, market participants continued to withdraw funds from their accounts abroad: the outflow in July is estimated at $ 6.3 billion. balance sheet, ”analysts say. They admit that banks thus attracted ruble liquidity: they sold currency on the domestic market, while concluding forwards – contracts for the repurchase of currency with a deferral. In July, Russian credit institutions withdrew $ 7 billion from accounts in non-resident banks.

The Central Bank reported on the currency cushion created by banks for $ 19 billion

The situation with foreign exchange liquidity is now different from what it was in 2018, notes Olga Ulyanova, vice president of Moody’s. According to her, earlier the deficit was caused by “outflow from the accounts of clients, frightened by the intensification of sanctions rhetoric.” In the summer and fall of 2018, the United States discussed the introduction of new restrictions on Russia, including against large banks. The Central Bank also made a purchase of foreign currency for the Ministry of Finance, which created pressure on the exchange rate of the Russian currency.

“Now it seems that banks themselves are“ letting go ”of non-profitable foreign exchange assets based on their expectations of future inflows and outflows,” says Ulyanova. After the crisis caused by the coronavirus pandemic, the US Federal Reserve urgently lowered the rate to almost zero (to the level of 0-0.25%): thus, funds on correspondent accounts in dollars ceased to generate income for banks. Euro rates set by the European Central Bank have been at zero or negative levels since the first half of the 2010s.

Foreign exchange reserves in banks could have been influenced by external events, admits Sergei Voronenko, director of the S&P financial institutions group: assets from market participants ”.

What risks does this pose

The situation with foreign exchange liquidity in the banking sector will continue to deteriorate: this may be facilitated by an insufficient inflow of the current account balance, as well as an outflow of investments from the OFZ market, Poryvai lists. He does not consider the situation critical: “This is not a new situation. For example, in September 2018, the shortage of foreign exchange liquidity was $ 3.5 billion – in general, it’s okay if this is a short-term situation. ”

The total volume of foreign exchange liquidity in the banking sector is at an acceptable level, according to the Central Bank. “This is also evidenced by the indicators of the cost of foreign exchange liquidity in the Russian money market, including the rate spread in the segments of currency swap and interbank loans (interbank loans. – RBC),” – explained the representative of the regulator.

The volume of highly liquid assets in foreign currency still remains at a comfortable level ($ 43.6 billion in July), Voronenko agrees. According to his estimates, foreign exchange assets cover about 15% of all foreign exchange liabilities of banks. “We do not yet observe a significant structural deficit of foreign exchange liquidity in the sector. The banks have a sufficient volume of ruble liquidity, and the Central Bank has enough instruments to meet the emerging needs in foreign currency. Perhaps this is a temporary effect, “- notes the S&P expert.

If credit institutions are in a state of foreign exchange deficit longer, will

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