August started with UAH98.92bn in banking sector liquidity, down UAH0.54bn from the previous day. The decline was caused by the Treasury and the NBU, while only cash inflows offset the majority of outflows. Funds were reallocated as banks decreased investments in CDs and accumulated additional funds at accounts with the NBU.
Banks' correspondent accounts with the NBU rose UAH0.90bn to UAH44.84bn while total CDs outstanding declined UAH1.44bn to UAH54.08bn. Banks decreased investments in 14-day CDs by UAH2.11bn while ON CDs rose by UAH0.68bn. Outflows to the Treasury's accounts were UAH1.48bn as the NBU absorbed UAH0.37bn. Only cash inflows offset most outflows.
Investment implications: The Treasury continued to accumulate funds at its accounts, decreasing total collected funds by only UHA1.08bn in July to UAH44.07bn. This Monday, the negative balance of Treasury operations rose slightly, being the main reason for the decline in liquidity decline combined with the NBU's absorption. At the same time, yesterday the Treasury paid UAH0.35bn in VAT refunds, which is unusual on the first day of the month, enabling liquidity to stabilize today.
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