Russian exporters hold key to financial liquidity

By Gleb Bryanski

MOSCOW (Reuters) - Russia's powerful oil and metals firms hold the key to the liquidity situation in the banking system in the coming months, a senior central banker told the Reuters Russia Investment Summit on Monday.

"If our exporters do not sell their proceeds, or preserve their foreign currency holdings, it will give us the result of 300-400 billion roubles ($11.7-$15.6 billion in daily refinancing demand)," said Konstantin Korishchenko, deputy chairman of the central bank.

The central bank injected hundreds of billions of roubles into the banking system through repurchase operations in August as foreign investors pulled money out of Russia and other emerging markets amid a global credit crunch.

Exports of oil, gas and other strategic commodities are the major sources of foreign currency in Russia, though more recently the country has also experienced a wave of capital inflows as firms and banks extensively borrowed abroad.

State-controlled companies such as oil firm Rosneft (ROSN.MM: Quote, Profile, Research, Stock Buzz) and gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) dominate the energy sector, while the metals and mining sectors are mostly in private hands.

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The exporters, acting through affiliated banks, are also major players in the domestic currency market, as they sell their earnings, mostly dollars, to the central bank, which in turn prints the roubles to take foreign currency off the market.

Korishchenko said exporters globally have started to behave more like financial investors, switching their earnings between currencies and assets. However, they still have to pay taxes in countries where they operate.

"The only definite part is how much they have to pay to the budget," Korishchenko said. The central bank has said it expects refinancing demand, which has subsided this month, to peak again in October and November.

Russia plans to increase oil export duty by 12 percent in October-November to a record $250 per tonne. The measure should increase the amount of foreign currency earnings the oil firms repatriate.

The central bank also plans to increase the amount of cash available for refinancing through expanding the list of securities that banks can pledge to obtain short-term funding, and lowering the rating requirement to junk level.

"We are even discussing a possibility of taking credit agreements as collateral. It is rather strange to see this kind of development, but it means that for sure our banking system will not have a problem of refinancing," Korishchenko said.

He called on banks to seek funding sources at home and said the central bank wanted to see the repo rate, currently at 6.04 percent, as the benchmark rate for the money market.