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Deposits shift from national currency to USD in Ukraine

The National Bank of Ukraine (NBU) published information about deposits made by households (individuals) in October 2011. According to the NBU, deposits from individuals went up to UAH306.759 billion, from UAH303.750 billion, in October, which is equivalent to USD 24.269B and USD24.461B correspondingly.

The specified growth occurred due to an outrunning increase in deposit volumes in foreign currency. Their level (equivalent of hryvnia) grew to UAH150.114 billion, from UAH147.446 billion. And the deposits volume in the national currency went down to UAH156.046B from UAH156.313B.

The trend of shifting deposits by individuals to foreign currencies from hryvnia has been keeping on since July 2011. The trend continues despite the fact that annual deposit rates increased from an average of 12.98% to 15.02% per annum (in our banking system), for 4 months, whereas rates for USD annual deposits in our banking system (taken on an average) went up from 6.71% to 7.3% per annum, for 4 months.

As Ukrainian finance analysts state, a shift of deposits from hryvnia to foreign currencies stems from high devaluation expectancies by the Ukrainians. However, a tough policy currency policy of the National Bank of Ukraine resulted in changing in this trend. By the end of November, the Ukrainian currency market revealed a trend that legal entities and individuals started selling of foreign currency. As a result, it is quite probable that the trend of shifting deposits to foreign currency would stop and would even turn to an opposite direction. Recall that the amount of hryvnia deposits made by individuals during a 2007 pre-crisis year exceeded foreign currency deposits by half – UAH102.379 billion (in UAH) as compared to USD64.86 billion (in USD equivalent).

Source: National Bank of Ukraine