Principle tendencies of Ukraine’s monetary market
In July of 2006
Under increased rates of economic development, there was continued to grow economic agents` demand for money, according to the official information of the National Bank of Ukraine. It is reflected in continuous increase of monthly rates of money supply, which also continued in July 2006. Improvement of macroeconomic situation encouraged continuation of other positive tendencies in the monetary market, in particular, the growth of banks` reserves and credit deposits against the background of interest rates decrease
In July 2006 the monetary base has increased by 2.5 % (since the year begin it has decreased by 0.7)%) and reached 82.2 UAH billion, money supply - by 3.5% (since the year begin - by 14.2%) up to 221.7 UAH billion.
The July increase of money supply was caused by not only issue of money into circulation, but also by intensification of money multiplication: money multiplier has increased in July from 2.67 to 2.70.
The monetary base increase in July was the result of performing interventions on foreign exchange purchase in the interbank foreign exchange market by the National Bank of Ukraine and by the decrease of the government funds in the national currency on accounts with the National Bank of Ukraine (by 3.1%).
To maintain the banking system liquidity, the National Bank of Ukraine has effected for the period: January - July the refinancing of banks to the general amount of 6506.9 UAH million, including 4662.1 UAH million of the overnight credits, 1254.9 UAH million of the direct repo with foreign exchange and 589.9 UAH million of credits via tender.
In July the general volume of refinancing transactions amounted to 472.5 UAH million, including 231.6 of the overnight credits, 240.9 UAH million of credits via tender. Predominant part of tender credits (97% of the sum total) was granted in July on the security of property rights on credits granted before, the rest (3%) - on the security of government T-bills.
Average-weighed rate on all refinancing instruments in January - July amounted to 12.04%, in July - 10.04%.
There were no transactions on fund mobilization in July. Since the year begin their volume has amounted to 3630 UAH million
Cash flow outside banks increased in July by 3% up to 66.2 UAH billion (since the year begin - by 10%), and its specific weight in money supply composition has almost not changed and equaled about 30%.
In July there was continued tendency of increasing banks reserves: total volume of deposits increased by 3.7% (since the year begin - by 16.1%) up to 154.3 UAH billion, at this, deposits in national currency increased by slower rates (by 2.8%), than deposits in foreign exchange (by 5%). Increase rates for both deposits of households and deposits of legal entities were equal in July and amounted to 2.7%.
The volume of credit deposits increased in July by 4.2% ( since the year begin - by 30.6%) up to 187.4 UAH billion. Cumulative (since the year begin) increase of credit deposits was the largest for the same period since 1996. Banks credit deposits to natural persons in July continued to grow by higher rates (by 8.8%) than credits to legal entities (by 2.5%).
The average weighted rate on credits decreased in July: from 15.5% to 15.0% in national currency and from 11.3% to 11.0% in foreign exchange. Integral rate on credits decreased from 13.8% to 13.4%.
Average weighted rate on deposits in national currency decreased in July from 7.3% to 7.0%, and in foreign exchange it increased - from 5.43 to 5.5%.