Russian banks flush with funds
MOSCOW: The Russian banking system is showing signs of paradox; the overnight interbank lending rates have jumped by 300% compared to rates in the beginning of the year. However, the system is flush with funds.
Experts have different views on the subject. Natalie Orlova , Chief Economist of Alfa Bank thinks the high interbank overnight rate of 6% is due to the Central Bank intervening. "In previous 2 months we've seen Central bank actively intervening on the Ruble exchange rate market. According to the Central Bank they have sold around 9 billion dollars in reserves, and this definitely has reduced available Ruble liquidity", she observed. Taking an opposite stand, Herbert Moos, CFO of the VTB bank said that the system is flush with funds and high rates may be a seasonal problem. "I would primarily associate that with Christmas and New Year. Banks want to make sure they're properly funded for relatively long holiday period in Russia in January - that's the main driver. Banking liquidity is relatively robust. If anything, banks have too much liquidity", he said, contradicting Orlova. Orlova said that banks have to increase interest rates in future as inflation continues to rise. She however agrees that liquidity has been strong overall throughout the year. "Deposit inflows are more sensitive to real interest rates, which are still highly positive. Despite accelerating inflation, real interest rates are still relatively high for Russian population. -PB News