IGLBs market (UAH): At the primary auctions in July, the Ministry of Finance increased the yields on all IGLBs having raised annual IGLBs to 11.15%, 2-year IGLBs – to 12.09%, 6-year IGLBs to 12.75%. The primary (traded by the Ministry of Finance) and secondary markets were weak before the NBU raised the discount rate to encounter rising inflation. The vast majority of investors were buying short-term and medium-term IGLBs. The total raised by the Ministry of Finance in July amounted to UAH 23 billion.
IGLBs Market (USD / EUR): At the primary auctions, the Ministry of Finance did not change the yield on IGLBs in dollar and left it at 3.7% -3.9%, while IGLBs in euro remained a yield of 2.5%. Demand for foreign currency instruments was low and allowed the Ministry of Finance to raise about 134 million dollars and 8.2 million euro. In the secondary market, there was no supply from IGLB holders due to the revaluation of the hryvnia.
OZDP Market (USD): There factors influencing OZDP demand in July have remained unchanged. They were tranquility in the east of the country and the government’s efforts to meet IMF requirements before the meeting of Zelensky and Biden. As a result, OZDP yields maturing in 2021-2028 kept the range of 4% -5.9%. August announcements and agreements made by two presidents, of Ukraine and the United States, to be the key drivers on supply and demand for OZDP.
Deposits: In June, deposit rates in hryvnia slightly increased: the short-term deposits in hryvnia and dollar (UIRD 3m) raised to 7% and 0.3%, the annual hryvnia and dollar deposits (UIRD 12m) did to 8.36% and 0.82%, respectively.
Foreign exchange market: The hryvnia strengthened against the dollar from 27.18 to 26.9 UAH per 1 USD. Strong exports from metal producers and farmers is the major force keeping the national currency steady.
Stock Market: US indices continued their upward trend in July, despite the risks of high inflation and overcapitalization of companies. The S&P 500 and Dow Jones increased by 2.1% and 1%, respectively. The Ukrainian market (UX index) decreased by 2.3%. The main factor in the decline of the index in July was the shares of Ukrnafta PJSC falling by 12.4%. The sharp fall in share price was due to negative forecasts on the company’s financial report in the 2nd quarter of 2021. The other two key issuers, Raiffeisen Bank JSC and Centerenergo PJSC, exceeded expectations with their quarterly revenue, which was reflected in the value of their shares by + 1.5% and + 4.2%, respectively.
NBU market activity: The NBU Monetary Policy Committee, held in late July, raised the discount rate from 7.5% to 8%. The inflation in Ukraine strengthened its upward trend showing price growth by 9.5% over the year, and by 6.2% since the beginning of the year, strongly pushing the committee members to increase the rate. The NBU will continue to raise the discount rate to affect inflation, if influencing factors stimulate price growth in Ukraine.
