Ukraine monetary base flat m/m in May
12 June 2017
Ukraine’s monetary base was unchanged in May from the previous month, the National Bank of Ukraine (NBU) reported on June 10. The monetary base shrunk 3.5% YTD. Money supply dipped 0.1% m/m (-1.3% YTD) compared to 1.3% growth in the prior month.
Alexander Paraschiy: We witnessed two contradictory tendencies with money formation in May. On the one hand, the NBU has been conducting substantial hryvnia injections when purchasing excessive foreign currency at the ForEx (or USD 521 mln in net dollar purchases in May). On the other hand, the extra hryvnias were absorbed by Treasury accounts due to slow spending amid fast revenue growth, as accumulations surged 41.2% to UAH 43.9 bln.
The summer months are likely to mimic the story of May, with the only difference that public spending is likely to accelerate. In autumn, we will see traditionally stronger budget outlays while foreign currency purchases at the ForEx will likely stop amid the renewed foreign currency deficit. We are sticking to our initial monetary base forecast for 8.6% YTD growth by the end of 2017.
