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imageMOSCOW: Russia's central bank said on Thursday it would introduce new foreign currency repos at the end of the month in dollars and euros to smooth rouble volatility and help banks manage their short-term foreign currency liquidity.

The central bank will hold its first 28-day repo on Oct. 29 and will then hold a one-week repo auction the following day, it said in a statement on its website.

The bank said that the minimum rates on the forex repos would be set at LIBOR plus 2 percentage points for the 1-week repo and LIBOR plus 2.25 percentage points for the 28-day repo.

Russia's central bank has spent over $9 billion defending the rouble this month as international crude prices have sunk to multi-year lows and Western sanctions over the Ukraine crisis have restricted Russian firms' access to capital markets.

The rouble strengthened slightly after the central bank announced the terms of the repo auctions, moving away from the upper limits of its trading band, but was still down over 0.8 percent from Wednesday's close at 0930 GMT.

The proposed limit for the first repo auction for a period of 28 days will be up to $1.5 billion and for the one-week repo up to $2 billion. The repo auctions will be held weekly on Wednesdays for the 28-day instrument and on Thursdays for the one-week instrument.

The central bank will determine the limit for the auctions on weekly basis.

"The aggregate maximum amount of debt on repo transactions in foreign currency is set by the Bank of Russia in the amount equivalent to $50 billion for the period until the end of 2016," the bank said.

Copyright Reuters, 2014

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