This Monday, the Treasury paid UAH6.08bn in VAT refunds, supported by UAH2.34bn from Treasury operations and higher cash, increasing liquidity by UAH0.93bn. NBU monetary operations also provided UAH0.18bn of funds.
Total liquidity rose UAH3.47bn to UAH100.18bn, the first time in the last two weeks. The increase was divided between banks' accounts and CDs. Banks' correspondent accounts with the NBU rose UAH1.80bn to UAH49.54bn and total CDs outstanding was up UAH1.67bn to UAH50.64bn. As the increase in CDs outstanding was due to an increase in purchasing of ON CDs, we expect it to be short-lived.
Investment implications: The increase in liquidity seems to be temporary due to a scheduled large VAT refund. As a significant portion of these funds could be absorbed soon via month-end tax payments, total liquidity could have fallen below UAH100bn yesterday and continue to decline through the end of a month.
ICU is an asset management and investmnet banking company.