Rates Weekly - February 10, 2021

> Ruble liquidity: Overnight rates to stabilize slightly below the key rate in the coming week. The O/N interbank rate fell to 3.3% on Monday, down from around 4.0% in the middle of last week. Yesterday, which was the last day of the averaging period, the CBR held a fine-tuning auction, at which it completely absorbed the excess liquidity in the system (about R3 trln). This caused the O/N interbank rate to shoot up 1 pp to 4.3%. At yesterday's 1w deposit auction, banks placed only R1.9 trln out of the R3.4 trln limit. It may be that banks would prefer to keep their correspondent accounts at the CBR at a high level before partially redeeming their 1m repo with the CBR on February 17 - we expect a drop in the volume of outstanding repo from the current R1.1 trln to R0.6 trln. We see O/N rates rising to around 4.1-4.2% over the coming week.> OFZs and rates: Another large offering at this week's OFZ auction. The Finance Ministry announced yesterday that it would offer up three issues at today's auction: the 5y nominal OFZ 26234, 10y nominal OFZ 26235 and 10y inflation-linked OFZ 52003. This caused yields to surge 6-10 bps. We doubt the ministry will place more than R30 bln today. We expect the CBR to keep the key rate unchanged at Friday's meeting, and perhaps signal that the rate-cut cycle has ended.