Non-government mutual funds: trends of the instruments
IGLBs market (UAH): In April, the Ministry of Finance had continued selling IGLBs at the primary auction at the following levels: the three-month IGLBs were being sold with the yield of 7.8% to 8%, the one-year IGLBs were 11.8%, the two-year and four-year IGLBs were being sold with 12.05% and 12.5% of yield, respectively. The secondary market reacted to the increase in the NBU’s discount rate to 7.5% by increasing the yields of IGLBs by 0.2% for all maturities. The demand for government instruments was low, as most investors expected the market to be balanced after the NBU’s actions and was mainly focused on summer IGLBs. The total volume of funds raised by the Ministry of Finance in April amounted to UAH 17.6 billion.
IGLBs market (USD): At the primary auctions, the Ministry of Finance did not change the yield of dollar IGLBs and left it at 3.9%. The demand for foreign exchange instruments was stable allowing the Ministry of Finance to raise about $ 112 million. There was no supply among holders of IGLBs, which was due to the stability of the hryvnia.
IGLBs market (USD): Possible escalation in the east of the country was the main factor causing the sale of government bonds. As a result, the yields on IGLBs maturing in 2021-2028 fell by 1%-3% from 4.5%-6.7% to 5.6%-7.8% range. The Russian military force concentration on the eastern border of Ukraine and the lack of a clear government policy to restore further cooperation with the IMF will negatively affect the demand for government bonds among investors in future.
Deposits: In April, the rates on deposits remained unchanged. The short-term deposits in hryvnia and dollar (UIRD 3m) were at 6.8% and 0.3%, while the one-year in hryvnia and dollar (UIRD 12m) were at 8.08% and 0.9%, respectively.
Foreign exchange market: The hryvnia were fluctuating against the dollar in the range of 27.75 – 28 and ended the month having strengthened at the level of UAH 27.75 / USD. The main reasons for the stability of the national currency have not changed; it is still powerful exports from metal producers and farmers.
Stock Market: The stimulation of the US economy by the Biden administration, moderate inflation rates in the US versus analysts’ forecasts, and active vaccinations in developed countries have made the basis for a the upward continuing trend and reaching new all-time highs in global stock markets. The Ukrainian stock market, the UX index, joined the global upward trend and showed + 0.3% in April.
NBU actions: The NBU’s Monetary Policy Committee taking place in April, raised the interest rate by 1% to 7.5% for the second month in a row in response to growing inflation rates since the beginning of 2021, namely, to 4% in 1Q2021. The NBU forecasts a sufficient impact of the rate hike on the inflation, which is to stabilize after reaching its maximum in the summer. The NBU will continue to raise the interest rate in case of other continuous factors stimulating price growth in Ukraine.
