Ukraine monetary base rises 2.9% m/m in September

Ukraine’s monetary base rose 2.9% m/m (by UAH 10 bln) in September (14.4% YTD) compared to a 2.1% m/m drop in the prior month, the National Bank of Ukraine (NBU) reported on Oct. 10. Money supply contracted 2.2% m/m in September (+9.1% YTD) compared to 2.9% m/m growth in August. The NBU purchased UAH 29.7 bln in state bonds in September, compared to UAH 44.6 bln in the prior month.

Alexander Paraschiy: Active state bonds purchases were the prime factor behind the monetary base jump in September. In particular, the last two months added UAH 77.4 bln to the NBU’s state bonds portfolio, which is 58.8% of the UAH 126.6 bln in bonds purchased by the central bank year-to-date. We anticipate the monetary base growth to slow in the next few months given that the last two months of hryvnia printing was done primarily to refund state monopoly Naftogaz. No doubt, the budget will experience difficulties but without IMF approval of a wide deficit, we do not expect the NBU to be engaged in printing more money for the coffers. Against this backdrop, we are keeping our monetary base growth forecast at 19.8% YTD for 2014.