MOSCOW, May 26 (Reuters) - If oil prices fall significantly below $40 a barrel, then demand for Russia's OFZ government bonds from foreign investors will fall by 50 percent, Russia's central bank said on Friday.
Russia's rouble-denominated OFZ bonds have been a foreign investor favourite recently, with flows helping the rouble to recover from record lows hit in 2016.
If oil prices rise over $60, then foreign demand for OFZ treasury bonds will rise by 15 percent, the central bank said, citing a poll of market participants.
If prices for a barrel of crude oil stay between $40 and $60, then demand for the Russian debt will stay unchanged, the poll showed.
The popularity of OFZs has been driven by their relatively high yields and the central bank's predictable monetary policy of trimming interest rates.
Foreign investors' share of the OFZ market hit a record high of 30.1 percent as of early April, central bank data showed this month.
Despite that record, the central bank said on Friday that domestic demand remained the key factor driving OFZ prices, adding that Russian investors' share of purchases on the primary and secondary markets was around 75 percent.
OFZs are used for carry trade, when a market player borrows dollars cheaply, converts them into roubles and then buys high-yielding bonds.
Around 60 percent of foreign investors hold OFZs for active buy/sell trading strategies, as opposed to holding the bonds to maturity, the poll cited by the central bank said. (Reporting by Alexander Winning and Andrey Ostroukh; Editing by Toby Chopra)