MOSCOW, July 29 (Reuters) - The Russian central bank injected 306.8 billion roubles ($9.34 billion) of one-year funds into the banking system on Monday at a cut-off rate of 5.75 percent.
The central bank offered up to 500 billion roubles at its first auction of one-year loans secured against non-market assets and guarantees. The new mechanism is aimed at improving the link between the short-term interest rates set by the central bank and longer-term borrowing rates in the wider economy.
The new lending facility has been seen by some analysts as a key way for the central bank to ease monetary conditions, thereby encouraging bank lending in order to boost lacklustre economic growth.
But the central bank has played down its impact, arguing that the implications for money markets will be broadly neutral. The relatively modest demand at Monday's auction bears out the central bank's position.
The one-year interest rate swap to Rouble Overnight Index Average (Ruonia) rose to 5.8 from 5.76 on Friday, while the rate on one-year non-deliverable forwards (NDFs), which include currency risks and a premium over dollar rates, was down 2 basis points at 6.05.
Separately, the central bank injected 356 billion roubles ($10.8 billion) at a repo auction on Monday, at an average rate of 5.5 percent.
Interbank rouble overnight rates fell to 6.25 percent on Monday from 6.3 percent on Friday. ($1 = 32.8370 Russian roubles)
(Reporting by Maya Dyakina, editing by Jason Bush) Keywords: RUSSIA ECONOMY/
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