BoP turns into USD 259 mln surplus in January

The balance of payments total surplus in January 2011 amounted to USD 259 mln vs. a deficit of USD 1 bln in January 2010, with the main reason for the reversion being an accumulation of account payables by importers. Mykyta Mykhaylychenko: The current account (CA) saw a surplus of USD 282 mln, 12% below the January 2010 level due to an almost 2x increase in the commodities trade deficit to USD 441 mln. Increases in energy and machinery imports, driven by recovering economy, overweighed increases in metals exports on the back of stronger foreign demand and high export prices. Transfers inflow was up 60% y-o-y to USD 262 mln. The financial account (FA), in turn, saw a marginal deficit of USD 23 mln vs. a deficit of USD 1.4 bln a year ago. This improvement was mainly driven by a significant USD 729 mln surplus in “other capital” thanks to, according to the NBU, accumulation of account payables by importers (who were awaiting cancelation of pension fund charges from noncash forex transactions, which came in effect at the very end of January). Capital outflow through loans and bonds grew 15% y-o-y to USD 945 mln, while FDI inflow amounted to USD 230 mln (+39% y-o-y). For the coming months, we expect the CA to turn into red with the whole year deficit to breach 2% of GDP vs. ~2% in 2010. The financial account, in turn, may see an improvement on the back of capital inflow (e.g. USD 2.25 bln of sovereign and corporate Eurobonds were placed in February). This implies that under favorable conditions in the international commodities and financial markets, Ukraine will see stable FX inflow and UAH is to stay broadly stable as the central bank continues keeping it from abrupt appreciation.