ICU Research: NBU and Treasury support liquidity

April 7, 2020
The liquidity dynamic become positive last week after falling to UAH170bn on Tuesday. By the end of the week liquidity recovered to UAH187bn. This week, we will see a positive balance of Treasury and NBU operations, with a liquidity increase towards UAH200bn.

FX market conditions turned positive (see comment below), and the NBU purchased extra supply of hard currency injecting UAH6.8bn into banking-sector liquidity. At the same time, banks exchanged UAH1.6bn of reserves in cash.

However, NBU paid to the budget UAH42.7bn of its profit from 2019, which allowed the Treasury to increase expenditures. In total last week, expenditures exceeded revenues by UAH8.3bn, having a positive impact on liquidity.

Thanks to these injections, banking-sector liquidity was up UAH17bn from it's lowest level of UAH170bn seen last Tuesday, before rising at the end of the week to UAH187bn.

ICU view: This week, we anticipate a positive impact from NBU and Treasury's operations and a further increase in liquidity. The total amount of liquidity will move towards and close to UAH200bn.
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