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The market is ready for the fact that elections are unlikely to take place in just one round, therefore all risks are provided for in investment forecasts.
Ukraine's financial market remains calm ahead of the upcoming presidential elections and it will see no particular upheavals once they are over, according to experts polled by UNIAN.
A senior analyst with Raiffeisen Bank Aval, Mykhailo Rebryk, noted the lack of signs of anxiety associated with the upcoming elections, both in the foreign exchange market and in terms of bank deposits. "In the foreign exchange market, several corporations have transferred certain amounts of reserves into foreign currency, possibly forming in advance a stock for dividend payment. But it was fairly smooth. There is a normal inflow on deposits from individuals and no suspicious outflows. Large sums of tax payments were withdrawn from the accounts of corporate clients as planned. That is, everything is calm," he said.
The expert stresses the market's readiness for the fact that elections are unlikely to take place in just one round, therefore all risks are provided for in investment forecasts. "If the president with whom investors are familiar remains in office, the influx of portfolio investment can be very strong, starting from May-June. The hryvnia will strengthen, which will positively affect inflation in the short term. The likelihood of key rate being reduced increases, while the investors' will to secure a high rate for the long term will be an additional incentive for injections," added Rebryk.
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According to expert forecasts, the coming to power of any new president should not set the market swinging. "If a new president comes to power, I think investors will be looking closely into the new leader's moves and therefore there will be no rush of capital inflows. But we're not expecting any large-scale capital outflow either. Before the parliamentary elections, the political situation should not strongly affect the market. Among the risks is a possible postponement of the tranche of the International Monetary Fund due to the situation with illegal enrichment, the need to raise the gas price, and delaying the 'split bill' adoption," said Rebryk.
Olena Korobkova, Executive Director of the Independent Association of Banks of Ukraine, also believes that the financial market is responding to the approach of the presidential election rather calmly. “The hryvnia started this year without the traditional fall in relation to the main world currencies. Since January, we have been able to observe only minor fluctuations in the exchange rate of the national currency. The economy has been growing for the third year in a row, the banking system has successfully passed the stage of cleansing, recapitalization, and reaching profitability. The banking supervision of the National Bank has undergone a high-quality reform: there are fewer banks, but they are healthy and reliable. Therefore, there is no need to be wary of disasters or other problems on the eve of the elections," she believes.
Also, Korobkova noted a more balanced approach of Ukrainians, who are not amenable to “seasonal” currency panic and make financial decisions more pragmatically. “Now people sell more currency than they buy. Even the introduction of the online exchange option caused a stir only in the information space, while failing to affect the volume of forex trading in general. In the current situation, there is no risk of a negative impact of the elections on the state economy. And, accordingly, there are no reasons for panic and stocking up foreign currency," she added, expressing expectations that the positive trends will prevail after the elections, and that the authorities will continue to introduce reforms critical for the country.
Chief expert at the NBU Council, Vitaly Shapran, also says that today there is no impact of the elections on the banking system. "It's quite the opposite: the volume of hryvnia deposits in Ukrainian banks in February 2019 increased by 1.2%, and foreign currency deposits in dollars – by 1.8%. I think this is a consequence of the policy of high interest rates. As for business activity, on the one hand, elections have always been and remain a catalyst (accelerator) of economic processes, on the other hand, they always mean a technical pause for large investment projects of foreign investors," explained the expert.
According to him, the foreign exchange market also reacts to political developments calmly. "As for the forex market, we're also seeing that the hryvnia has shown a trend to revalue – it fluctuates around the mark of UAH 27 per dollar under the influence of economic factors. I believe that the influence of political factors on the market is now weak, since Ukraine has the program with the IMF. Whoever wins the election, the country will still have to implement the IMF program," said Shapran.
UNIAN memo. This spring, Ukraine is holding presidential elections, while parliamentary elections are scheduled for the fall. The first round of presidential elections will be held March 31.
In Jan-Feb, the national currency strengthened by 3%, up to UAH 26.86 per dollar, and by 3% against the euro, up to UAH 30.66/ EUR.
Over the two months of this year, the volume of hryvnia deposits in Ukrainian banks increased by 0.9%, to UAH 544.8 billion, and foreign currency deposits (in dollar equivalent) – by 0.7%, to $13.5 billion.
The volume of investments by non-residents in Ukrainian government bonds from the purchase of hryvnia bonds since year-start has almost tripled, up to UAH 18.6 billion.