In early June, the financial markets of most countries continued to rise amid a gradual recovery in economic activity. However, in the second decade of the month, the markets have prevailed pessimistic moods connected with fears of a second wave of coronavirus in the United States and the growth of active cases of coronavirus in a number of emerging markets, noted in the next issue of the review “the Liquidity of the banking sector and financial markets”.
In June a structural surplus of liquidity decreased. This partly contributed to the “lagging” holding banks required reserve averaging on the background of expectations of lower key rates at its June meeting of the Board of Directors of the Bank of Russia. In General, due to the dynamics of the factors of forming liquidity saw an influx of funds into the banks.
The spread of interest rates on interbank crediting (MBK) to the key rate of the Bank of Russia expanded in the expectations of market participants of lowering the key rate in June. Spread bets in the segments of “currency swap” and MBK has become negative, an increase in the cost of foreign currency liquidity helped reduce the supply of currency by individual banks.
The market participants ‘ expectations for the key rate in June continued to decline. As a result, the reduction of the key rate by 100 b.p. was expected by most market participants and did not lead to volatility in the market.
Photo preview: Richard Drew / AP / TASS