The ongoing strengthening of the hryvnia is a consequence of the high value of the national currency due to a tight monetary and weighted fiscal policy, as well as growing earnings from exports, Deputy Governor of the National Bank of Ukraine (NBU) Oleh Churiy has said.
“There are several factors that are conducive to the stronger hryvnia: these are, first of all, a tight monetary policy, a balanced fiscal policy, and the third important factor is that this year Ukraine has gathered a harvest that was a record over the years of independence. All this means export earnings which have reinforced what is happening today,” he said at a briefing in Kyiv on Saturday.
As reported, the hryvnia forex rate has been strengthening since the end of October. After the introduction of martial law on November 26 until December 26, the national currency dropped sharply to UAH 28.315 per U.S. dollar. However, after a couple of days, the hryvnia resumed its positive momentum, which has accelerated sharply since December 17. The hryvnia forex rate on the interbank forex market on Friday strengthened to UAH 27.385 per U.S. dollar from UAH 27.515 at the end of the previous working day. Quotes of the hryvnia at the end of trading stood at UAH 27.37-27.40 per U.S. dollar.
The arrival of the first disbursement under a new Stand-By Arrangement with the International Monetary Fund (IMF) and related financing can increase the country’s international reserves to more than $20.4 billion by the end of this year, Deputy Governor of the National Bank of Ukraine (NBU) Oleh Churiy has said.
“Our reserves can grow to more than it was on January 31, 2013, and they will exceed $20.4 billion,” he said at a briefing in Kyiv on Saturday.
Churiy specified that this forecast was made taking into account the expected arrival of about $400 million in external financing, which the government will raise under guarantees provided by the World Bank.
The NBU official recalled that Ukraine had received $1.4 billion in the first SBA disbursement in the past week, and EUR 500 million in the first tranche of the EU’s Macro-Financial Assistance was provided earlier this month.
As reported, after the receipt of the first SBA disbursement, the National Bank on December 21 reported the growth of the international reserves to $20.1 billion, which was a five-year maximum: the previous time such a level of the international reserves was recorded in January 2014.
The National Bank of Ukraine in early November lowered the forecast of the country’s international reserves for the end of 2018 to $19.2 billion from $20.7 billion, for 2019 to $18.6 billion from $18.8 billion and for 2020 to $19.1 billion from $19. 7 billion.
Several companies and banks are designing a mobile application for buying government domestic loan bonds, Head of the Depositary Operations Department of the National Bank of Ukraine (NBU) Andriy Suprun has said.
“I think that next year, perhaps at the beginning of the year, the purchase of government domestic loan bonds by individuals can occur in several clicks in a mobile application. Several market players are currently working on the creation of this solution,” he said at the annual Ukrainian Financial Forum in Odesa, organized by the ICU investment group.
Suprun said that the NBU, for its part, provides them with the necessary support.
“We are writing an open API [application programming interface] and allow everyone to get involved in this competition, to provide the corresponding service to the market,” he said.
In addition, the representative of the NBU said there will be an opportunity to submit brokerage applications in the primary government domestic loan bonds market in the near term.
“In fact, the next auction can take place with a possibility for any investor to submit applications to the Finance Ministry through primary dealers. This should improve the indicators of attracting funds, primarily from the population,” Suprun said.
In general, he considers these initiatives to be mutually beneficial for the state and the population.
“The state receives a resource, natural persons – a good percentage, almost tax free, in contrast to deposits, as well as a 100% state guarantee for any amount,” he said.
Head of the National Bank of Ukraine Yakiv Smolii positively assesses the course of the negotiations on the possibilities of obtaining the next tranche of financing with the mission of the International Monetary Fund (IMF) that have been held in Kyiv since September 6.
“The negotiations with the IMF are continuing. The mission is finishing its work next week, and we expect a positive decision on continuing cooperation,” he told journalists on the sidelines of the 15th YES forum organized by the Victor Pinchuk Foundation in Kyiv.
Asked about the aspects of this cooperation, Smolii noted that the fund’s continued financial support for Ukraine remains an important element of it.
“The replenishment of foreign exchange reserves is the key to macro-financial stability,” the NBU head said.
As reported, the IMF mission headed by Ron van Rooden began work in Kyiv on September 6 and plans to work until September 19 “to discuss the latest economic events and economic policy.”
Money supply in Ukraine in August 2018 increased by 0.3%, to UAH 1.233 trillion, such preliminary data of monetary statistics are posted on the website of the National Bank of Ukraine (NBU).
The country’s monetary base expanded 0.3% last month, to UAH 421.89 billion.
The NBU said that off-bank cash in August shrank by 0.6%, to UAH 344.17 billion, while ending stock on deposits grew by 0.9%, to UAH 888.66 billion.
Since early 2018, money supply grew by 2% and monetary base – by 5.7%, while off-bank cash rose by 3.5%.
Money supply in Ukraine in July 2018 increased by 1.3%, to UAH 1.229 trillion, such preliminary data of monetary statistics are posted on the website of the National Bank of Ukraine (NBU).
According to the central bank, this dynamics is due to the growth in the balance of deposits by 1.7%, to UAH 881.579 billion, and the amount of cash in circulation outside banks by 0.8%, to UAH 346.654 billion.
In general, since early 2018 money supply has increased by 1.6%.
The NBU said the deposit portfolio of banks in the national currency in July rose by 1.5%, to UAH 515.475 billion, in foreign currency by 2%, to UAH 366.104 billion.
In general, since the beginning of the year the deposit portfolio of banks has increased by 0.6%, in particular, in the national currency by 5.1%. The deposit portfolio in foreign currency decreased by 5%.
The yield of deposit products in the national currency for business last month increased by 0.4 percentage points (p.p.), to 12% per annum, in foreign currency declined by 0.2 percentage points, to 1.9% per annum.
In general, in January-July 2018 the rate on hryvnia deposits for business increased by 3.3 percentage points, while on foreign currency deposits fell by 0.9 percentage points.
The interest rate on deposits for the population in July did not change either in the national currency or in foreign currency.
Since the beginning of this year, the rate on deposits for the population in the national currency has increased by 0.2 percentage points, to 10.7% per annum, while in foreign currency it decreased by 0.4 percentage points, to 2.3% per annum.
The loan portfolio of the banks in July increased by 1.9%, to UAH 1.043 trillion. In particular, the volume of loans in the national currency increased by 1.5%, to UAH 593.749 billion, in foreign currency it decreased by 2.3%, to UAH 449.452 billion.
Since the beginning of the year, the loan portfolio of the banks has grown by 2.7%, in particular in the national currency by 4.2% and in foreign currency by 0.8%.
According to the NBU, the cost of hryvnia loans for business last month decreased by 0.1 percentage points, to 16.9% per annum, foreign currency loans by 0.5 percentage points, to 6.1% per annum.
In general, for the seven months of the year the cost of loans for corporate borrowers in the hryvnia rose by 2.7 percentage points, in foreign currency decreased by 1.4 percentage points.
The cost of hryvnia loans for the population increased by 0.2 p.p. in July, to 32% per annum, in foreign currency by 4.3 percentage points, to 10% per annum.
Since the beginning of 2018, the cost of borrowings for the population in the national currency has increased by 3.3 percentage points, in foreign currency by 1.6 percentage points.
The monetary base in July rose by 0.2%, to UAH 420.598 billion. The growth for the seven months was 5.4%.
Net international reserves in July decreased by 2.9%, to $6.832 billion, the banks’ debt on refinancing loans fell by 0.1%, to UAH 58.58 billion.
In general, since early 2018, net foreign exchange reserves increased by 2.4%, the banks’ debt on refinancing loans decreased by 14.7%.
