Starting October 27th Russia’s key financial regulator Central Bank introduced a new financial tool known as foreign currency repo, or repurchase agreement.
“These operations are aimed at further empowering credit institutions to manage their own short-term currency liquidity,” according to Central Bank of Russia’s press center.
The credit organizations total maximum loan will constitute $50 billion by the end of 2016.
The first repo auctions are scheduled to begin at leading Russian stock exchange, Moscow Interbank Currency Exchange, on October 29th and October 30th of this year. The period of repo auctions will be 28 days and will constitute up to $1.5 billion and up to $2 billion on a week-long auction.
Introduction of the purchase agreement is aimed at relieving the pressure put on the Russian ruble since the political turmoil over Ukraine. The tool is expected to slow down the ruble’s devaluation on the foreign exchange market.
The chief economist for Russian financial group AFK Sistema, Evgeniy Nadorshin, commented in an interview with Russia Today:
“If the Central Bank makes the right estimates, we will immediately feel relief. Anyway, a total of $50 billion should be enough to relieve the tension in the foreign exchange market.”