Andrei Kozlov, securities department head of the Central Bank, said Friday that the bank and the Finance Ministry will hold three-month treasury bill auctions on the first and third Tuesday of each month starting Aug. 2. The auctions at the Moscow Interbank Currency Exchange formerly occurred once a month.
The Finance Ministry will auction 600 billion rubles ($300 million) in 100,000-ruble T-bills in its sixteenth issue next Tuesday, Kozlov said. The government uses the bills to finance its budget deficit without fueling inflation.
The rising volume of monthly T-bill issues, which grew from 1 billion rubles in May 1993 to 1.5 trillion rubles last June, has led to sharp liquidity drops on the interbank credit market on the eve of each auction as commercial banks amass funds to buy the government securities.
Maxim Kvasha, an expert with the government Center for Economic Reforms, said that increasing the frequency of the auctions will significantly ease the pressure on the credit market.
"The fact that this demand is more spread out across time will lead to more stability," he said.
Kozlov added that the T-bills should be particularly attractive now that interbank credit rates are falling due to an oversupply of rubles.
"We'd rather have that money for the budget than let it weigh down the market," he said. Annualized interbank rates for three-month loans reached about 140 percent this week, while Kozlov predicted that the average annualized yield at Tuesday's auction would be only a little lower than the previous issue's 154.65 percent.
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