According to the official information of the National Bank of Ukraine, the situation in the monetary market of Ukraine in March 2006 was characterized by restrained dynamics of money supply, which was in line with current policy of the National Bank of Ukraine to decrease inflation risks and to prevent negative influence of monetary factor on inflation processes. Consumer price index amounted in March to 99.7%, since the year begin - 102.7 % (in January-March 2005 - 104.4%)
At the same time, there were continued positive tendencies to increase banks deposits and credit deposits upon the background of interest rates decrease.
In March 2006 the monetary base decreased by 1.4% (since the year begin -by 8.8%) and reached 75.5 UAH billion, money supply increased by 2.2%(since the year begin -by 0.7%) up to 195.4 UAH billion. The flow of monetary indicators in March was also influenced by change of tendencies at the interbank foreign exchange market, which caused interventions on foreign exchange sale by the National Bank of Ukraine. The effect of this factor on the flow of monetary aggregates was partially set off due to the decrease by 15.6% of the government deposits in the national currency on accounts with the National Bank of Ukraine.
Cash flow outside banks increased in March by 2.9% up to 58.6 UAH billion, and its specific weight in money supply composition remained at the level of 30%. At the same time, cumulative (since the year begin) increase of the cash flow outside banks (decrease by 2.6%) was the lowest for the same period since 2000.
In spite of decrease in March volumes of correspondent accounts by 16.7%, the average weighted credit rate in January decreased by 2.8% (on overnight credits - up to 2.3%) in comparison to 3.3% (2.8%) in February.
To secure the monetary market equilibrium the National Bank of Ukraine effected in March banks refinancing to the amount of 282 UAH million (repayment of credits to the amount of 210.8 UAH million, whereas volume of transactions on mobilization of funds equaled 50 UAH million (it was returned earlier mobilized funds to the amount of 310 UAH million).
In March there was continued tendency of increasing banks reserves: total volume of deposits increased in March by 1.9% (since the year begin - by 2.1%) up to 135.8 UAH billion, at this, there was growth of deposits in both national currency (by 1.3%), and in foreign exchange (by 2.8%). Natural persons deposits increased by higher rates (by 2%) in comparison to deposits of legal entities (by 1.7%).
The volume of credit deposits increased in March by 5.4% ( since the year begin - by 10.1%) up to 157.9 UAH billion. Cumulative (since the year begin) increase of credit deposits was the largest for the same period since 2002. Banks credit deposits to natural persons in March continued to grow by higher rates (by 8.4%) than credits to legal entities (by 4.5%).
Positive dynamics of credit holdings was observed under continued decrease of lending value: average weighted rate on credits in national currency decreased in March from 15.9% to 15.8%, at the same time rate on credits in foreign exchange remained at the level of 11.5%.The integral interest rate on credits slightly increased from 14.1% to 14.2. At the same time, average weighted rate on deposits in national currency decreased from 7.8% to 7.3%, and in foreign exchange: from 6.6% to 6.3%. At this, the integral interest rate on deposits decreased from 7.3% to 6.9%.