Ukraine individual foreign cash purchases plunge 17x, central bank says

Ukrainians’ net individual foreign cash purchases by 17 times, to $262.3 mln in 8M13 from $4.5 bln a year ago, according to NBU data released on September 10.  In particular, August net individual cash purchases were $136.2 mln.

Alexander Paraschiy: The NBU report raises more questions than gives answers. Usually, the reports on individual cash purchases closely correlate with data on foreign cash outflow from the banking system (released with balance of payments data). However, in July 2013 the two data went in different directions: the NBU reported that Ukrainians are selling off their foreign cash, at the same time foreign cash outflow from the banking system was the highest for the year (USD 539 mln).

Against this backdrop, we have concerns about the NBU’s claims that the situation on the cash market improved in August. At the moment, we are observing growing pressure on the national currency and we are keeping our forecast at USD 500 mln in foreign cash demand each month till the year end. At minimum, cash outflow from the banking system should reflect our forecast.