May 30, 2018 / 2:34 PM / 6 months ago

Russia central bank warns of higher global volatility, lower oil risks

MOSCOW (Reuters) - The Russian financial sector lived through shocks caused by the latest U.S. sanctions and now faces risks of higher global market volatility along with lower oil prices, the Russian central bank said on Wednesday.

Washington imposed sweeping sanctions in April on some of Russia’s biggest companies and businessmen to punish Moscow for “malign activities”, battering the Russian markets and sending the rouble weakening.

The central bank said the Russian market showed “maturity” of thinking in its reaction to the sanctions.

“Foreign investors’ interest in Russia assets remain in place,” the central bank said.

In a semi-annual report on financial stability the central bank warned that it now sees risks coming from tighter monetary policies worldwide.

“Changes in expectations toward a more rapid monetary tightening by the leading central banks (USA, Europe, Japan) amid a quicker economic growth could be the main factor for higher volatility on the global financial markets in the future,” the Bank of Russia said.

Higher borrowing costs in dollars will lead to countries’ higher expenditures on servicing debt in national currencies, the central bank said.

“A significant factor for the Russian market remains the risk of a decline in oil prices, for instance in case of a further substantial increase in oil output by the United States,” the central bank said.

A further escalation of geopolitical tensions also represent risks, although their probability has decreased recently, the central bank said.

Reporting by Andrey Ostroukh, editing by Larry King

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