Ukraine monetary base inches up 0.3% in August

Ukraine’s monetary base increased 0.3% m/m (UAH 1.3
bln) to UAH 422 bln in August after rising 0.2% m/m in July, the National Bank
of Ukraine stated in a provisional report released on Sept. 12. The monetary
base has increased 5.7% YTD. Money supply increased at the same growth rate of
0.3% m/m (2.0% YTD) to UAH 1,233 bln.

Evgeniya Akhtyrko: The main
factor for the August increase was UAH 2.9 bln in banks’ refinancing by the
National Bank of Ukraine. Meanwhile, other factors played against the monetary
base increase. In particular, treasury residuals surged from UAH 2.0 bln in
July to the YTD maximum of UAH 27.1 bln in August, pointing to less generous
public spending than in the previous months. In addition, the central bank’s
net currency sale of USD 651 mln on the ForEx also contributed to hryvnia
exiting the system.

We expect to see a 6.1% YTD increase of the monetary
base in 2018 (vs. 4.6% YTD in 2017) amid a controlled budget deficit and gross
reserves growth.