In June, for the first time in a long time, there was a reduction in the volume and share of hryvnia time deposits in the banking system despite maintaining positive rates in real terms.
The Committee on Monetary Policy noted similar trends in the OVDP market: Interest in government bonds on the part of individuals decreased somewhat, and investors focused more on securities with short maturities. At the same time, the demand for foreign currency grew, which increased the pressure on the hryvnia exchange rate. As a result, the NBU had to calm the market with both currency and verbal interventions. Therefore, further softening of monetary policy may negatively affect expectations, consolidate the tendency to decrease interest in hryvnia assets, and provoke additional demand for the currency.
Several committee members noted that the attractiveness of the hryvnia changes gradually, depending on how nominal rates change, expectations, and how investors reassess the risk premium.
Â