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Economists believe that this is not Russia–specific, but one driven by the global increase in bond yields.
The decision is primarily driven by the US Federal Reserve’s decision to reduce monetary stimulus.
“In turn, this is related to the Bernanke [US Federal Reserve chairman] speech that he gave a couple of weeks ago, when he alluded to the possibility that the quantitative easing programme may be slowed down” Ivan Tchakarov, Renaissance Capital’s chief economist for Russia/CIS told The BRICS Post.
“This meant that there will be less free money chasing yield, so investors withdrew some of their investment from fixed income instruments, leading to higher interest rates globally.
“What happened in Russia is just a result of this. Given then this increase in yields, the ministry of finance decided to cancel the auction as it was not prepared to pay such a high price,” added Tchakarov.
The last placement of government bonds on May 29 was not successful for Russia’s finance ministry.
The ministry had then managed to place bonds worth $31 million out of approximately $600 million in limit, yielding 6.35 per cent yearly.