Ukraine monetary base increases 1% mom in July

Ukraine’s monetary base increased 1.1% m/m (+9.2% YTD) and its money supply (M3) grew 1.7% m/m (+10.0% YTD) in July, according to NBU data released on August 12. State bond purchases remained almost flat at UAH 4.3 bln (UAH 4.2 bln in June). The NBU’s state bonds portfolio grew UAH 30.2 bln in 7M13.

Alexander Paraschiy: We see the growing exposure of the NBU to state bonds as the main reason for the monetary base increase. Given that the situation in the fiscal sector is quite tough, we might see the NBU further ballooning monetary aggregates. Still, in light of heightened devaluation sentiments this fall, a reverse in monetary policy is quite probable. In this respect, we are keeping our monetary base growth estimate at 10.3% in 2013.