Rates Weekly - August 18, 2020

> Ruble liquidity: Overnight rates to rise due to taxes; cash dynamics finally normalized. Over the last week O/N rates stabilized at a normal level of 4.1%, 15 bps below the key rate. There was R300 bln in excess liquidity, but this didn't weigh much on O/N rates, as banks were hoarding liquidity ahead of tax payments early next week. For the rest of this week, we expect the liquidity excess to grow, thanks in part to a decrease of cash in circulation, the dynamics of which seem to have normalized after significant growth in March-July. This means that O/N rates could fall a bit to 4.05%. Next week, significant liquidity outflows will happen due to taxes. A MET payment of R300 bln, VAT of R150 bln and excise payments of R90 bln are all due next Tuesday. As a result, O/N rates will likely rise to 4.25% next week.> OFZs and rates: Ruble rates moving higher amid developments in Belarus. It looks likely that ruble rates will continue rising against the backdrop of the political developments in Belarus. To help the market to stabilize, the Finance Ministry cancelled the OFZ auctions for tomorrow. This news led yields to drop 5 bps.