Individual demand for foreign cash in Ukraine rises in September

Макроэкономика 15.10.2014 Net individual demand for foreign cash in Ukraine increased to USD 265 mln in September compared to USD 201 mln in the prior month, the National Bank of Ukraine (NBU) reported on Oct. 14. For 9M14, net individual demand for foreign cash was USD 2.0 bln, which is 2.1x more than a year ago (USD 941 mln). Alexander Paraschiy: Individual demand was somewhat lower in September than we anticipated. We assumed that the reported USD 735 mln in net interventions of the NBU on the ForEx were primarily intended for individual demand. The currency panic also seemed to promise higher cash purchases by Ukrainians, to be reflected in statistics. However, it looks like state restrictions on cash foreign currency purchases (one cannot buy more than USD 200 in one transaction) and a foreign cash deficit at the exchange offices dampened the figures. Yet this means that foreign currency cash withdrawals (USD 1.1 bln in September) were probably the driving force. Consequently, the bulk of the ForEx interventions were allocated to support private banks, which is a disturbing development. Unfortunately, we are not observing any stabilization at the ForEx, which prompts us to expect further increasing individual demand for foreign cash. At the same time, net retail purchases of dollars might be much smaller m/m in October, due to banks’ apparent unwillingness to sell dollars to individuals.