Russian state cash to help avert liquidity shortage

MOSCOW, March 24 (Reuters) - Russia may escape a liquidity crunch that had been widely expected this week due to government and central bank measures to support the banking sector and foreign currency inflows, analysts said on Monday.

Money market rates <RUBOND=> stayed at around 3.00/3.75 percent and the one-day Mosprime rate <MOSPRIMEOND=> at 3.63 percent ahead of Tuesday's mineral extraction tax payment, which will suck up to 160 billion roubles ($6.76 billion) from the banks.

Russian banks borrowed only $240 million from the central bank at a daily repo auction while commercial banks' accounts and deposits at the central bank, the key liquidity indicator, grew by 16 billion roubles.

"This means that tomorrow's situation in the money market does not scare anyone," said Yevgeny Nadorshin, analyst at Trust Bank. Inflows from oil export revenues, a major source of foreign currency, also remain strong.

The central bank expected liquidity demand to shoot to 300 billion roubles by end-March as corporate tax payments were due to coincide with debt redemptions but the prospects have improved after oil firm Rosneft repaid $5.2 billion last week.

The central bank extended the list of securities it is ready to take as collateral in repo transactions while the government said it was ready to alter the budget system and start placing the cash on accounts in commercial banks.

Russia has kept the federal budget cash in the central bank since 2002 -- a measure which improved control over spending practices and helped sterilise petrodollar inflows.

"The budget is still the most serious sterilisation tool we have," said Nikolai Kashcheyev, analyst at VTB.

The system has made the money market vulnerable to corporate tax payments, which suck billions from the banking system on days when payments are due. The payment of a corporate profit tax is due on Friday.