IGLBs market (UAH): August was the month of vacations, thus the Ministry of Finance was not active at the primary auctions, leaving yields on all IGLBs unchanged: on the annual – 11.3%, on the 2-year – 12.09% and on the 6-year – 12.75%. The secondary market was passive, too, staying calm until the next decision of the NBU to raise the discount rate to meet the rising inflation. The vast majority of investors were asking for the medium-term IGLBs. The total of funds raised by the Ministry of Finance in August amounted to only UAH 11.8 billion.
IGLBs market (USD / EUR): At the primary auctions, the Ministry of Finance traded 2-year IGLBs in US dollars only once, with the yield left at 3.9. The demand for foreign currency instruments was quite stable comparing to the previous month, which allowed the Ministry of Finance to attract about 128 million dollars. There was demand in the secondary market due to limited supply from the Ministry of Finance and a forecasted seasonal devaluation of the hryvnia in September.
OZDP Market (USD): The causing factors for OZDP demand in August were all the same – the stability in the east of the country and the government’s efforts to meet IMF requirements before the meeting of Zelensky and Biden would take place. As a result, OZDP yields maturing in 2021-2028 remained largely stable at the range of 4%-5.9%. There were no pessimistic forecasts on the verge of the meeting of the two presidents, thus, it influenced the yields, which were mostly fluctuating in the spread of quotations.
Deposits: In August, deposit rates remained broadly unchanged: the short-term hryvnia and dollar (UIRD 3m) remained at 7% and 0.3%, while the annual hryvnia and dollar (UIRD 12m) did at 8.4% and 0.8%, respectively.
Foreign exchange market: The hryvnia continued its summer upward trend against the dollar and strengthened from 26.9 to 26.86 UAH per 1 USD. The main reasons for the stability of the national currency remained unchanged —strong exports from metal producers, farmers and services in the IT sector.
Stock Market: US indices continued the upward trend for the third month in a row. The S&P 500 and Dow Jones added 3% and 1.5%, respectively, in August. The Ukrainian market (UX index) decreased by 1.1%, with the majority of shares in the index showing a downward trend.
NBU actions: The NBU Monetary Policy Committee did not meet in August and all investors’ concerns were focused on the meeting in September. Considering the context of rising inflation, the market consensus is to be laid on rising the discount rate minimum by 0.5%.
