Page 57 - RUSRptApr17

6.2.1 Local debt market dynamic
In 1Q17 non-residents expanded their presence on the OFZ market by RUB 250bn, which accounts for around 80% of total placements over this period.
Part of the reason the CBR made a surprise 50bp cut to the prime rate was to slow this inbound speculative capital.
According to CBR officials, the proportion of non-residents on the OFZ market reached a new historical high of 29% as of early April . The heightened interest of foreign capital toward the Russian debt market since the beginning 2016 stemmed from higher real rates. At the same time, higher dependence of the Russian market on portfolio investment inflows amid a potential increase in uncertainty on financial markets is a risk factor, for the Russian FX market as well, which served as an argument to ease interest rate policy
More cuts are on the way and bankers estimate the rate will fall from 9.25% now to 8.5% by the year end.
57 RUSSIA Country Report April 2017 www.intellinews.com