Ukraine monetary base slows to 0.3% m/m in September

Ukraine’s monetary base inched up UAH 0.9 bln (+0.3% m/m) while the money supply (M3) increased UAH 12.1 bln (+1.4% m/m) in September, according to National Bank of Ukraine (NBU) data released on October 11. Year-to-date, monetary base increased 11.5% and M3 grew 12.4%. NBU state bonds purchases increased slightly to UAH 3.0 bln from UAH 2.4 bln a month ago. At the same time, sterilizing operations through deposit certificate purchases jumped to UAH 60.9 bln from UAH 19.8 bln in August.

Alexander Paraschiy:  In light of heavy NBU support for the state budget (UAH 3.0 bln in state bond purchases and nearly UAH 6 bln in direct injections to the budget in September), we anticipated the monetary base to increase by at least 1% m/m. However, some factors limited monetary base growth. From the data, we concluded that active sterilizing operations (UAH 60.9 bln) and UAH 5.0 bln in internal debt redemption were among the key determinants of the September result. Against this backdrop, we still are keeping our monetary base growth forecast at 13.2% yoy in 2013.