Ukraine monetary base rises 2.6% in April

Ukraine’s monetary base rose 2.6% m/m in April (flat year-to-date) compared to a 0.4% m/m decline in March, according to a National Bank of Ukraine (NBU) report on May 12. Money supply (M3) also grew 0.9% m/m in April (+2.3% YTD) compared to a 0.9% m/m decrease in the prior month.

Alexander Paraschiy: The April spike reveals volatility  as hardly anyone could have predicted a sudden upsurge in the monetary base after three consecutive months of contraction. No doubt substantial NBU hryvnia interventions at the ForEx (the bank purchased USD 675.8 mln in April) was the key factor in the spike. Still, there is no guarantee the tendency with ForEx interventions will sustain itself during the upcoming months. What’s more, we anticipate depreciation pressure to return to the market in 2H16. Against this backdrop, we still anticipate the monetary base to increase by only 7.6% YTD in 2016.