ICU Research: Increases in liquidity of Ukrainian banking system continues

February 17, 2020
Absorption of extra hard-currency supply, and mostly balanced Treasury operations caused a further increase in banking-sector liquidity to above UAH248bn last week. This week, the amount of liquidity will depend on FX purchases by the NBU, but acceleration in quarterly tax payments may avoid an increase in liquidity.

Last week, the net impact of Treasury operations was UAH2.9bn, which, with inflow through other non-monetary operations (UAH0.5bn) and outflow via reserves exchange in cash (UAH4.1bn), had a negative impact of non-monetary operations of UAH0.7bn. But hard-currency purchases by the NBU, and its injections in liquidity through the FX market of UAH4bn compensated non-monetary outflows and caused an increase in liquidity to a new record high of UAH248bn last Thursday.

ICU view: We don't expect liquidity to increase this week, despite possible inflows from the NBU. The Treasury can absorb a considerable amount of liquidity through quarterly tax payments and low VAT refunds. So, liquidity can stay high above UAH240bn, although it is not likely to make new records.
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