May 2021
IGLBs market (UAH): At the primary auctions in May, the Ministry of Finance increased the yields on short-term IGLBs and maintained the yields on the placement of medium and long-term IGLBs, namely: 5-month IGLBs – 9%, annual – 11.2%, 2-year – 12.05%, 6-year – 12.5%. The secondary market was weak and followed inflation rate being the main driver for investors in government bonds. Demand for government instruments was low due to repayment and focused on annual IGLBs. The total amount of funds raised by the Ministry of Finance in May was UAH 21.5 billion.
IGLBs Market (USD/EUR): At the primary auctions, the Ministry of Finance did not change the yield on IGLBs in USD and left it at 3.9%, whereas the 8-month IGLBs in euros were traded with a yield of 2.5% due to the demand for the euro. The demand for foreign exchange instruments was stable and allowed the Ministry of Finance to raise about 62 million in USD and 237 million in EUR. There was no selling among IGLB holders at the secondary market due to the stability of the hryvnia.
OZDP market (USD): As the east was quiet and no negative announcements followed from government officials, the demand for OZDP grew again. As a result, OZDP yields maturing in 2021-2028 returned the March levels wise of 4.5% -6.7%. The NATO summit, the outcomes of Biden and Putin in June and the resumption of cooperation with the IMF will to be the main triggers influencing buying or selling OZDP in the coming month.
Deposits: In April, deposit rates remained unchanged: short-term hryvnia and dollar (UIRD 3m) at 6.8% and 0.3%, annual hryvnia and dollar (UIRD 12m) at 8% and 0.9%, respectively.
Foreign exchange market: The hryvnia against the dollar strengthened from 27.75 to 27.5 UAH/USD. The key reasons for the national currency remained stable stay the same – a substantial export from metal producers and farmers.
Stock Market: US indices kept their all-time highs in May, despite the risks of high inflation and overcapitalization. The Ukrainian market (UX index) grew by 2.9% thanks for the most active stock in recent months of Ukrnafta PJSC. The demand for shares, significantly increased from UAH 240 to UAH 310, which is 29%, thanks for ZZA’s decision to distribute dividends for 2018 and the distribution of profits for 2020, amounting in total to about UAH 107 per share.
NBU actions: The NBU Monetary Policy Committee did not meet in May. The focus is on rising prices in May, which will have an impact on the meeting in mid-June. The NBU foresee a sufficient impact on the inflation rate increase, expectedly fixing its level after reaching its maximum this summer. If prices will continue to rise in Ukraine due to a number of factors other factors, the NBU will continue to raise the discount rate.
