Last Thursday, the Treasury collected approximately UAH8.5bn of tax payments versus lower expenditures and an insignificant VAT refund. As the result, the balance of Treasury operations was negative UAH4.15bn, caused by a decline in liquidity. There were outflows via other operations as well, including interest on NBU loans. Only inflows via cash partially offset outflows. Ultimately, liquidity declined UAH3.77bn.
As a source for outflows, banks' correspondent accounts with the NBU declined UAH2.40bn and total CDs outstanding slid UAH1.37bn. Investments in 14-day CDs remained steady as banks decreased investments in ON CDs.
Investment implications: Liquidity continues to decline, and could decline further today as last Friday was the last day of month-end tax payments. We do not anticipate outflows to be offset, as last Friday's VAT refund was so paltry. The NBU held no FX auction last Friday and could purchase some FX today. Because of these factors, liquidity could decline below UAH100bn.
ICU is an asset management and investmnet banking company.