reports
- Research Team
Weekly Insight -- Inflation falls sharply in March
Ukraine’s annual inflation slowed further to 3.2% in March from 4.3% in February, which came as a major surprise.A significant deceleration in consumer prices was largely due to a decline in food prices, which is highly unusual for this time of the year. Prices for food staples declined by 0.2% MoM implying an only marginal growth of 0.2% in YoY terms. A number of significant food basket components were significantly cheaper in YoY terms, namely eggs (-34.3% YoY), sunflower oil (-17.4%), sugar (...
- Research Team
Weekly Insight -- Ukraine’s real GDP recovers 5.3% in 2023
Ukraine’s real GDP grew by 5.3% YoY in 2023 following a 28.8% slump in 2022. The growth was supported by heavy government spending and recovery of domestic private consumption.Nominal GDP is estimated at UAH6,538bn (+25% YoY). In FX terms, GDP amounted US$179bn (+10% YoY) based on the 2023 official average exchange rate.
- Research Team
Weekly Insight -- Bond market reacts to NBU key rate cut
At the primary auction, the MoF lowered interest rates for UAH bonds by 20‒30bp following NBU’s surprise cut in key rates a week before. YTMs in the secondary market also declined.The MoF borrowed UAH16.3bn (US$419m) last week, including UAH10.5bn (US$269m) in local currency. Demand for UAH bonds doubled compared with the week before, accompanied by a decline in interest rates in most bids. Expectations of a decline in bond rates were high last week after the NBU cut its key rate and the rate on...
- Research Team
Weekly Insight -- NBU surprises with a rate cut
The key monetary policy rate was lowered by 50 bps to 14.5%. This surprised the market since the latest macro forecast from the regulator indicated an unchanged rate until July. NBU stated that weakening inflation reached 4.3% YoY in February, FX market stabilized and inflows of foreign financial aid improved. The interest rate on the 3-month certificates of deposits (CDs) and the rate on refinancing loans were lowered by 150bps to 17.5%. NBU will amend the rules that determine the amount of li...
- Research Team
Weekly Insight -- NBU reserves down 4% in February
NBU gross international reserves decreased 3.8% in February and 8.5% YTD to US$37.1bn as inflow of foreign financial aid remains insignificant. The decline in reserves was driven by NBU sale interventions in the FX market that totalled net US$1.5bn in February. Also, Ukraine repaid nearly US$0.7bn of principal and interest to IFIs. Meanwhile, the government received US$0.8bn in grants from Japan and Norway, which replenished NBU reserves. Net FX borrowings in the domestic market were negative a...
- Research Team
Weekly Insight -- Financial account significantly negative
In January, Ukraine’s financial account turned significantly negative while the current account balance improved markedly. The current-account deficit improved to US$0.5bn in January thanks to a better balance of trade in goods. Export of goods was up 12% YoY while imports surprisingly declined 1%. The balance of trade in services was little changed in December, but improved substantially vs January 2023, which reflects a decline in expenditures of Ukrainian refugees abroad. Migrant incomes fel...
- Research Team
Weekly Insight -- Significant redemptions of domestic FX debt
Last week, the Ministry of Finance was able to refinance a significant portion of redemptions in euro. This week, a redemption of USD-denominated bills for US$453m is scheduled, and the MoF plans to raise about two-thirds of that volume in tomorrow's auction.
- Research Team
Weekly Insight -- Ukrainian Eurobond market in seasaw
Statements made by Russian officials after talks with the US and NATO have led to a significant increase in fear of a possible Russian invasion of Ukraine and worsened Ukraine's credit risk assessments by local and international investors. All this was happening on the back of the expected tightening of the Fed's liquidity support. This led to a sell-off of Ukrainian Eurobonds, which is likely to continue this week.
- Research Team
Weekly Insight -- Hryvnia weakens as liquidity flows in
VAT refunds and local-currency debt redemptions partially in favour of foreign investors increased demand-side pressures in the FX market and weakened the hryvnia exchange rate. This week, economic activity will begin to gradually recover after the holidays that may cause new exchange rate fluctuations.
- Research Team
Weekly Insight -- Economy healthier but too slow
Ukraine will enter 2022 with a solid safety cushion thanks to sound fiscal and monetary policies, strong external commodity markets, and a resilient banking sector. However, sluggish economic growth and high inflation will be a grain of salt. Russia’s aggression toward Ukraine will be the key non-economic factor to closely monitor next year and beyond. Repetitive maneuvers of Russia’s troops along Ukraine’s borders will continue to disturb business and damage investor sentiment toward Ukraine.
- Research Team
- Research Team
Macro Review-Ukrainian Economy: Healthier but Too Slow
Ukraine will enter 2022 with a solid safety cushion thanks to sound fiscal and monetary policies, strong external commodity markets, and a resilient banking sector. However, sluggish economic growth and high inflation will be a grain of salt. Russia’s aggression toward Ukraine will be the key non-economic factor to closely monitor next year and beyond. Repetitive maneuvers of Russia’s troops along Ukraine’s borders will continue to disturb business and damage investor sentiment toward Ukraine.
- Research Team
Weekly Insight -- Yields of Ukrainian bonds rise
Last Tuesday, the Ministry of Finance raised interest rates on local-currency bonds by 5-50bp in response to demand from auction participants, as this auction was the first after the increase in the NBU key policy rate. Interest rates may rise tomorrow, too.
- Research Team
- Research Team
- Research Team
- Research Team
- Research Team
Bond Market Insight -- Short-term financing prevails
Yesterday, the Ministry of Finance raised UAH12.7bn (US$470m) for the budget, mainly in local currency. Interest rates were raised minimally, and the MoF accepted all the demand, which was surprisingly unanimous. But almost 80% of the borrowings came through semi-annual bills.
- Research Team
Weekly Insight -- IMF completes first review of Stand-by Programme
The IMF Board of Directors approved the first review of Ukraine’s Stand-by Programme last week. The review comes after a delay of more than one year relative to the initial schedule. The IMF also agreed to extend the Stand-by Programme that was scheduled to end this year by another six months until June 2022.
- Research Team
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