Liquidity at month low

Обзор облигаций 11.12.2017 Last Thursday, liquidity continued to decline to a new low this month. Banks' correspondent accounts with the NBU fell UAH0.58bn to UAH42.67bn while total CDs outstanding fell UAH1.43bn to UAH32.74bn, decreasing liquidity UAH2.01bn to UAH75.41bn. Banks increased ON CDs by UAH0.91bn while longer term CDs fell by UAH2.34bn. Fund outflows were caused by non-monetary operations at UAH2.02bn. Banks increased the exchange of reserves into cash with a net outflow UAH1.68bn while the negative impact from Treasury operations amounted to UAH0.34bn. At the same time, the NBU provided a UAH0.01b ON loan to one bank. Investment implications: Currently, liquidity remains low with a delay in recovery which should start later this week. If local budgets withdraw their deposits prior to a significant increase in budget expenditures, this will have a negative impact on liquidity. As banks decreased their investments in 2-week CDs, there is a high anticipation of significant volatility and a slow recovery in liquidity over the next few days.