Business news from Ukraine

JOINING CLEARSTREAM INTERNATIONAL DEPOSITARY BECOMES MAIN REFORM IN UKRAINE’S CAPITAL MARKET OVER FIVE YEARS

The accession of the Ukrainian market to the network of the Clearstream international depositary is a very important step for the infrastructure, ensuring long-term prospects for the capital market in Ukraine, and the National Bank (NBU) intends to further actively develop the market infrastructure, as it considers it to be its area of responsibility, Deputy Governor of the NBU Oleg Churiy has stated.
“[Joining Clearstream] is the most important reform in the capital market over the past five years. It will provide an opportunity to more actively attract funds from non-residents,” he told the Interfax-Ukraine news agency on the sidelines of the Sweden-Ukraine Business Forum held in Kyiv.
Commenting on the opinion that such a simplification of entry/exit of non-residents to the Ukrainian market threatens with the outflow of their funds, Churiy noted that “only one-third of the short-term money of non-residents [are invested in government domestic loan bonds] maturing this year, while two-thirds [are invested in those maturing] next year.”
The banker added that often non-residents invest these funds in new government bonds, therefore this does not mean that they will leave immediately after the bonds are redeemed.
At the same time, Churiy stressed it is necessary to do a lot more for the development of Ukraine’s capital market, and the National Bank intends to actively participate in this process.

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UKRAINE’S FOREX RESERVES NARROW BY 1.6% IN MAY

Ukraine’s forex reserves in May 2018 narrowed by 1.6%, reaching $18.12 million as of June 1, 2018, the National Bank of Ukraine (NBU) has published the preliminary data on its website. The central bank said that the reduction of the forex reserves is linked to payments on state debt. “Some $455.1 million was paid to the International Monetary Fund (IMF), $214.4 million to service and pay the government’s debt in foreign currency, including $126.2 million on government domestic loan bonds and $18.5 million on sovereign bonds,” the NBU said.
The main source of expanding the reserves in May was the purchase of foreign currency in the interbank market. According to the NBU, high prices for Ukrainian exports (metals, ore and grain) contributed to stable currency inflows, as well as an increase in the supply from banks, which the central bank expanded from the beginning of April to conduct its own operations with foreign currency on the interbank market.
In general, the National Bank in May bought out $181.2 million in the interbank market. All purchases were made in the form of interventions at the best rate.
In addition, last month, the reserves received $272.3 million and EUR 64.6 million from the placement of government domestic loan bonds denominated in foreign currency by the government.
The volume of reserves was also affected by the revaluation of financial tools (change in market value and the exchange rate of the hryvnia against foreign currencies) by $162.3 million.
In general, as of June 1, 2018, the volume of international reserves covers 3.2 months of future imports and it is sufficient to fulfill Ukraine’s obligations and current operations of the government and the National Bank.

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