Ukraine monetary base increases 4% mom in April

Ukraine’s monetary base increased 4.3% mom (+4.7% YTD) and its money supply (M3) grew 2.0% mom (+5.6% YTD) in April, according to NBU data released on May 17. NBU state bonds purchases increased slightly to UAH 4.1 bln in April from UAH 3.0 bln a month ago. The NBU purchased UAH 20.3 bln state bonds in the first four months of the year.

Alexander Paraschiy: A decrease in external liabilities on the back of a USD 400 mln IMF debt repayment, and the continuing active purchase of state bonds by the NBU, are seen to be the key factors of April’s monetary base increase. What’s more, against the backdrop of reduced devaluation sentiments, we saw the monetary authorities limiting sterilizing operations with deposit certificates (down to UAH 6.5 bln from UAH 10.2 bln a month ago), which was also reflected in the monetary base growth.

These numbers indicate that the NBU might try to push forward with monetary easing over the next few months. In this context, we update our estimate for 2013 monetary base growth to 8.9% YTD from 6.1% YTD.