At the end of last week, liquidity appears to have stabilized with very low volatility. Last Friday total local currency liquidity rose a mere UAH0.32bn to UAH103.04bn, relatively unchanged from last Thursday morning, while funds were reallocated from CDs to banks' accounts. Banks' correspondent accounts with the NBU rose UAH2.97bn to UAH47.64bn while total CDs outstanding fell UAH2.66bn to UAH55.40bn.
Although the key impact on liquidity has routinely involved autonomous or non-monetary operations, last Friday they mostly offset one another. While cash fell UAH1.95bn, higher budget expenditures and positive Treasury outflows of UAH1.53bn and other operations caused non-monetary operations to decline UAH0.35bn. This negative impact was compensated by the NBU via non-classified monetary operations of UAH0.67bn.
Investment implications: The Treasury increased expenditures, allowing it with the NBU to support stability in liquidity and a slight recovery to keep it around UAH103bn. Most likely, the NBU had some REPOs or other operations with FX to provide inflows into liquidity, and we should not see significant volatility through the end of this week, depending on budget expenditures and VAT refunds.
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