Financial market of Ukraine: trends January 2021

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Financial market of Ukraine: trends January 2021

The tendencies observed in different sectors in January 2021 were:

IGLBs market (UAH): Since the beginning of the year, the Ministry of Finance has continued selling IGLBs at the primary auction with same level of yield wise as in December 2020. Three-months IGLBs are being sold with set yield of 10% to 10.25%, six-months IGLBs are 10.75%, one-year IGLBs are 11.65%, two-year and four-year IGLBs are being sold with 12% and 12.5% of yield, correspondingly. Due to the demand for domestic government trades among international investors, going up since the mid of January, the Ministry of Finance raised from UAH 6 to 9 billion at each auction. Secondary market revival is going at moderate pace, with no change in yields with a slight advantage of short-term IGLBs. The total raise by the Ministry of Finance in January was UAH 37.2 billion.

IGLBs Market (USD): US Dollar IGLBs were also selling at auctions with yield of 3.8%, having no rise since December 2020. Since the first half of January, demand for foreign currency trades has shifted from moderate to prevailing. The devaluation of the hryvnia became the moving force in the decision-making among IGLBs holders.

OZDP market (USD): There was slow demand for Ukrainian Eurobonds during January, resulted in no-rise in yield rate for OZDP with the maturity in 2021-2028, with the same yield wise of 4.8%-6.7% as in December.   

The moving force influencing OZDP rates in the coming months to be further government implementation of announced reforms and cooperation with the IMF.

Deposits: Deposit rates continued the downward trend of 2020: short-term hryvnia deposits (UIRD 3m) has fallen by 0.25% to 7.77%, one-year hryvnia deposits (UIRD 12m) has done by 0.4% to 8.3%, short-term deposits in dollar (UIRD 3m) has fallen by 0.1% to 0.5%, one-year deposits in dollar (UIRD 12m) has done by 0.2% to 1.1%.

Foreign exchange market: The hryvnia strengthened against the dollar in January by 0.3%. Thus, the hryvnia has risen from UAH 28.27 to UAH 28.19 per USD 1. Strong exports from metal producers and farmers, as well as the activity of institutional investors in the IGLBs market is considered to be the main reason for that.

Stock market: Despite downward trends in world stock exchange during January, Ukrainian stock index, UX, continued growth, rising by 3% in the month reported. The largest increase in share price among the index traders showed PJSC “Centerenergo” and JSC “Raiffeisen Bank Aval”, rised by 11.2%, and 5.9%, correspondingly. Shares of PJSC “Ukrnafta” stayed still after a sharp rise in December 2020.

NBU trade activity: The NBU Monetary Policy Committee, held in January, kept the interest rate at the level of 6%. Despite the increased pressure of inflation in December 2020 and January 2021, most members of the Committee voted to keep the interest rate with no rise, which, as was reasoned, occurred due to temporary growing inflation being beyond the influence of monetary policy.

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