Rates Weekly - August 4, 2020

> Ruble liquidity: O/N to stay stable near 4.05% as new averaging period starts; CBR projects slow return of cash into the banking system. Last week, O/N rates rose to 4.25% due to high demand for liquidity in order to meet the required reserves ratio. Tomorrow, the new reserves averaging period starts, and we expect ruble liquidity to be in slight surplus and for O/N rates to stay near 4.05%. In its monetary policy report published yesterday, the CBR presented an interesting analysis of cash in circulation, which has grown a significant R2 trln since March, which has led to a similar reduction of the structural liquidity surplus. The CBR expects this growth to abate amid the economic recovery and lifting of quarantine measures, although it expects this process to be rather gradual and last until 1H21.> OFZ and rates: Finance Ministry likely to place R30-40 bln at tomorrow's OFZ auctions with no yield premium. We think that tomorrow R20-30 bln will be placed in the 5y OFZ 29014 floater, similar to last week. Demand should be supported by budget funds having been paid out at the end of July. For the other issue on offer, the nominal 10y OFZ 26228, we see demand remaining weak and only R10 bln being placed.