Ukraine monetary base increases 0.6% in July

Ukraine’s monetary base increased 0.6% m/m (5.6% YTD) in July from 4.5% m/m growth in the prior month, the National Bank of Ukraine (NBU) reported on Aug. 10. Money supply (M3) increased 0.8% m/m in July (+5.1% YTD) from 1.5% m/m in the prior month.

Alexander Paraschiy: The main factor in July’s growth was NBU purchases of foreign cash at the ForEx (USD 257.8 mln). This trend was reflected in continued net foreign asset increases (+1.6% m/m) and is in line with our expectations, but we also anticipate that the role of net foreign assets in monetary base formation will be decreasing starting September following C/A deficit expansion. On the other hand, we assume that accelerated budget spending in 2H16 will underpin monetary base growth in the autumn months. Since these developments are close to our initial projections, we are keeping our monetary base forecast at a 7.6% YTD increase for 2016.