Ukraine monetary base falls 1.2% m/m in November

Ukraine’s monetary base declined 1.2% m/m in November compared to a 5.4% m/m drop in the prior month, the National Bank of Ukraine (NBU) reported on Dec. 11. Since the year start, it has still risen 6.9%. Money supply increased 1.3% m/m in November, and remains at a 6.9% gain from the year start. The NBU purchased UAH 8.0 bln of state bonds in November (UAH 147.35 bln and USD 5.0 mln from the year start).

Alexander Paraschiy: Further gross reserves contraction (by 20.8% in November) against the backdrop of relatively modest hryvnia printing was the main reason for monetary base decline during the month. In December, the NBU might support the budget more aggressively but a scheduled repayments on gas debt (USD 1.65 bln in December) will partially offset any growth. Therefore, we expect the monetary base should conclude the year by having grown about 7% YTD.

For 2015, monetary aggregates’ dynamics will remain volatile. For our baseline scenario, we anticipate gradual stabilization of the ForEx market and continued cooperation with the IMF, which would cause the monetary base to grow in the double digits (+23% YTD) in 2015.