Liquidity recovery begins

Обзор облигаций 05.11.2015 After significant outflows and a decline in liquidity, banking sector liquidity slightly recovered yesterday, up UAH1.52bn to UAH86.97bn, as funds were reallocated between banks' accounts and CDs. Banks' correspondent accounts with the NBU slid UAH0.20bn to UAH29.98bn yesterday, while total CDs outstanding rose UAH1.72bn to UAH67.00bn. Investment implications: Liquidity usually recovers at the beginning of month as long as the FX market is stable. This month started with liquidity declining, most likely due the weakening UAH/USD exchange rate and increase in demand for FX. However, recent decisions and new regulations, including deposit repayments for Finance and Credit Bank clients, could have a positive impact for liquidity, supported yesterday's liquidity increase. Moreover, increased budget expenditures by the MoF could support the liquidity recovery further.