NBU Raises Daily Reserve Requirements To 100%.

The National Bank of Ukraine (NBU) has decided to raise the volume of mandatory reserves for banks by 20 percentage points to 100% of the sums of the mandatory reserve that they must keep in their correspondent accounts with the NBU at the start of an operating day. Concorde Capital: This is the second time the requirements have been raised this year. In April 2005, the NBU increased the daily reserve requirements for banks by 10 percentage points to 80%. In August, the NBU tightened a number of its requirements: the reservation rate for funds attracted by banks was increased from 7% to 8%; the NBU also raised its discount rate from 9% to 9.5%. The rapid growth in prices this year (in Jan-Jul CPI was 6.7% vs. 4.4% in 2004) has required the National Bank to tighten its monetary policy in order to keep annual inflation under the politically important level of 10%. If these measures prove to be insufficient, a further hryvnia revaluation may take place this autumn.