Weekly review: Authorities withstood market pressure, IMF talks upcoming; Metinvest\'s 9M results

Local currency. The local currency gained noticeably over the past week as USD sellers have outnumbered buyers. The USD/UAH exchange rate now stands very close to 8.0/USD, where it began this year. While this could result from seasonal factors, however, the FX market will reveal its true condition in the second half of January, when early signs of success or failure in IMF talks materialize. Our base case scenario envisages a successful IMF agreement.

Domestic bond market. The NBU remains the largest bondholder of Ukrainian domestic bonds as it continued to increase its portfolio. Last week, it purchased more than UAH2.0bn of bonds in the secondary market. However, as its deals were likely more oriented toward supporting liquidity, with over UAH3.0bn in inflows, liquidity was stable and covered outflows.

Eurobond market. With the onset of Christmas holidays, the seasonal lull in the market caused YTMs and spreads to be stable last week. Moreover, the continued appetite and demand for risky assets has also decreased pressure on YTMs.
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