Regulators proposed that Russian banks adopt an emergency RUONIA, the Overnight Ruble Index Average, starting September 1, 2022. This move aims to shield borrowers from sharp swings in exchange rates when issuing loans with variable interest rates. The Central Bank of the Russian Federation published this guidance on its public information portal.
According to the Bank of Russia, RUONIA represents the weighted rate for unsecured overnight ruble loans between banks and serves as a proxy for the cost of one business day of borrowing on the interbank market.
The bank’s message notes that when lenders issue floating-rate products or develop other financial offerings, the emergency RUONIA should be used as a benchmark with maturities of one, three, or six months. This is intended to provide more stability for borrowers amid market volatility and interest-rate uncertainty.
Earlier this year, on July 29, media reports raised questions about the potential phasing out of trade in the dollar and euro due to evolving sanctions and regulatory responses. The regulator indicated that alternative scenarios were being considered in collaboration with market participants to reflect possible shifts in the foreign exchange environment.
Prior coverage indicated that discussions were taking place among market participants and the Bank of Russia regarding how to set the ruble’s exchange rate against the dollar and the euro should foreign exchange trading be interrupted. These talks reflect ongoing efforts to ensure orderly price discovery and financial stability under a wide range of external scenarios. This context underscores the central bank’s emphasis on risk mitigation for banks and consumers alike, given the dynamic nature of sanctions regimes and global financial flows.
In summary, the emergency RUONIA framework is presented as a precautionary tool designed to anchor expectations for short-term rates and to help lenders manage exposure to currency and rate volatility. Stakeholders should monitor official communications for any updates or adjustments in response to evolving market conditions, sanctions developments, and policy directives from the central banking authority. [Source: Bank of Russia press service]”