Monthly Macroeconomic and Monetary

Review

April 2024

Monetary Policy and Economic Analysis

Department
Summary
 Economic growth in Ukraine's main trading partners (MTPs) is recovering and inflationary pressures
remain resilient. Global energy prices fluctuated within a narrow range, with the available supply being sufficient
to meet demand. Both major CBs and EM CBs are expected to cut interest rates more moderately given the
relative persistence of inflation
 Consumer inflation in Ukraine further slowed down in February – headline inflation to 4.3% yoy, core
inflation to 4.5% yoy. This reflected a more ample supply of certain food products, including due to warmer
weather and second-round effects from larger last year’s harvests, as well as lower pressure from business costs
for raw materials and energy. Along with the situation in the FX market remaining under control, these factors also
eased underlying inflationary pressures. According to the NBU’s estimates, inflation kept declining in March
 Business activity expectations continued to improve in March. Weather conditions favored the sowing
campaign and construction works. Consumer demand remained solid, and animal husbandry continued to
recover. The operation of the sea corridor supported transportation and improved expectations in metallurgy. At
the same time, increased shelling at the end of the month, in particular those aimed at energy infrastructure, likely
slowed economic recovery in both industry and service sectors
 Labor demand continued to grow, while supply remained tight, in part due to a further increase in the
number of migrants. Personnel shortages put upward pressure on wages. Household income growth is also
supported by budget expenditures, pension indexation, and minimum wage increases
 In March, the state budget deficit (excluding grants from revenues) was moderate, despite the record
amount of international aid. Domestic borrowings also remained an important source of financing budget needs
 In February, narrowing of the current account deficit continued: the reinstatement of the blockade of the
western borders pushed the imports of goods down, and the gradual adaptation of forced migrants abroad led to
further reduction in the imports of services under the "travel" item. Less regular disbursements of official financing
led to a decrease in gross reserves to USD 37.1 bn as of end of February. However, in March, reserves
increased again due to significant financial inflows from partners
 The situation in the FX market has remained under control and exchange rate fluctuations were
moderate. In line with the principles of managed flexibility regime, the hryvnia exchange rate moved both in the
direction of weakening and strengthening. The NBU resumed the key policy rate cut cycle earlier than expected,
however the yields on hryvnia assets in real terms remained positive
2
External Environment
Economic growth in Ukraine's main trading partners (MTPs) is
recovering and inflationary pressures remain resilient
Manufacturing PMI of selected countries CPI in selected countries and Weighted Average of
Ukraine’s MTP countries' CPI (UAwCPI), % yoy
65 22 90
20 80
60 18
16 70
14 60
55 12 50
10
8 40
50
6 30
4 20
45 2
0 10
40 -2 0
01.22 05.22 09.22 01.23 05.23 09.23 03.24
01.24 01.22 05.22 09.22 01.23 05.23 09.23 01.24
03.24
UAwCPI Euro area China
Euro area USA China
Czechia Poland USA
Turkey India Poland Romania Turkey (RHS)
Source: S&P Global. Source: national statistical offices, NBU staff estimates.
 Leading indicators showed further growth in manufacturing in major economies – Ukraine’s MTPs –
and a slower pace of decline in the CEE and Eurozone, primarily due to a gradual reduction in
inventories. At the same time, the services sector remained the growth engine in all countries.
Rerouting of ships due to the Red Sea crisis has had little effect on supply chains so far
 Business confidence reached its highest level in two years, driven by expectations of lower interest
rates and an easing of inflationary pressures
 However, inflationary pressures from Ukraine's MTPs (UAwCPI) remained elevated compared to pre-
pandemic levels, primarily in the services sector. Inflation remained persistent due to pressure from
higher wages amid strong labor markets
4
Global energy prices fluctuated within a narrow range, with the
available supply being sufficient to meet demand
World Brent oil prices (USD/bbl) and Netherlands Natural gas imports to the EU by origin, bcm
TTF natural gas prices (USD/kcm) The whole year 12 weeks of respective year
400 90
140 3000

Тисячні
3500 80
350
120 2500 70
300
100 2000 60
250
50
80 1500 200
40
150
60 1000 30
100 20
40 500 50 10
20 0 0 0
01.22 05.22 08.22 12.22 04.23 08.23 12.23 03.24 2021 2022 2023 2021 2022 2023 2024

russia Norway LNG

Brent Natural Gas (RHS) Algeria UK Other

Source: Refinitiv. Source: Bruegel (russia, Norway, Algeria – pipelines).

 Global oil prices. Geopolitical tensions due to the conflict in the Middle East and attacks in the Red
Sea increased upward pressure on prices. Additional factors included improved demand in the US and
the effect of OPEC+ restrictions. However, still weak demand in most regions of the world and active
production in the US, Libya, Iran, Angola, and Venezuela kept prices from rising
 Gas prices in Europe. Record stocks for the current period (59%) and the growth of wind power in
Europe, projected mild weather, and stable LNG exports from the US put pressures on prices.
However, an increase in spot demand from China, India and Southeast Asia in anticipation of hot
summer weather and a likely cyclone-related supply constraint from Australia led to higher LNG prices
in Asia. This, in turn, kept prices from falling in Europe
5
Global prices for steel and iron ore continued to decline, while
grain prices stabilized at a relatively low level
Global steel and iron ore prices, USD/MT Global grain prices, USD/MT

900 200 500

450
800 180
400
700 160
350
600 140 300
500 120 250

400 100 200

150
300 80
01.22 04.22 08.22 12.22 04.23 08.23 11.23 03.24
01.22 04.22 08.22 12.22 04.23 08.23 11.23 03.24
Corn. Yellow #2 Del. US Gulf
Slab/billet Q235 China Billet Exp FOB Ukraine
Iron Ore (RHS) Wheat K C Hard National

Source: Refinitiv, Delphica. Source: Refinitiv.

 Steel and iron ore fell in price under pressure from sluggish demand in most regions of the world,
despite the expected spring recovery (in particular due to Ramadan). An additional factor was a
relatively steady increase in supply, which, in the face of weak demand and intense competition, led to
further price declines
 Wheat and corn prices fluctuated within a narrow range. Significant inventory destocking by russia
and Brazil ahead of the expected good new harvest put downward pressure on prices. In contrast,
possible disruptions in grain supplies from the Black Sea, reduced planted areas in the US, and robust
global demand kept prices from falling too far
6
Both major CBs and EM CBs are expected to cut interest rates
more moderately given the relative persistence of inflation
The number of FOMC* members that expect the Key policy rates in selected EM countries, %
respective policy rate at the end of the year, based
on the results of the meetings 50
6 45
40
5 35
30
4
25
3 20
15
2 Median (Mar)
Median (Dec) 10
1 5
Dec Mar Dec Mar Dec Mar 0

KZ

PL
EG

KE

BR
BY
AM

PH
TR
GH

GE
ZA
CL
NG
RU

UA

HU

RO
IN

ID
MX

MY
MD
2024 2025 2026
* The size of the circle is determined by the number of Current As of 1 January 2024
participants supporting the appropriate rate level. Forecast for the end of 2024 Forecast for the end of 2025
Source: Fed (according to the meetings in December 2023 Source: official web pages of central banks, Focus Economics,
and March 2024). Oxford Economics, as of 29.03.2024.
 The Fed and the ECB have left rates unchanged and continue to emphasize that their decisions will
be data-driven. The ECB has cut its inflation forecast and signaled that it could probably ease its policy
in June. The Fed considers it appropriate to start cutting rates ‘at some point this year’ (it still expects
three cuts in 2024), while some policymakers are calling to be patient amid persistent inflation and a
strong economy. Markets expect easing to begin in June, but there is currently no clear consensus on
the extent of rate cuts
 The CB of Switzerland unexpectedly, the first among the CBs of advanced economies, has cut the
policy rate. In contrast, the CB of Japan has ended the period of negative interest rates
 The CB of Mexico has joined the EM CBs` rate cutting cycle. The СB of China has room for further
reduction of the reserve requirement ratio. At the same time, the CB of Turkey unexpectedly raised its
key rate by 500 bps amid worsening inflation outlook 7
Ukraine: Inflation
Consumer inflation in Ukraine continued declining

Inflation* and inflation target, % yoy Inflation expectations for the next 12 months, %
30 30
5.0

25 4.0 25

20 3.0 20
01.24 02.24 03.24

15 15 11.3
10.4
10 10 8.7
8.1
5 5

0 0
01.22 07.22 01.23 07.23 03.24 01.22 07.22 01.23 07.23 03.24
Target range CPI Banks Corporates
Core CPI Inflation target Households* Financial analysts
* The dotted line indicates a change in the method of survey
* Data for March reflects nowcast. for a telephone interview.
Source: SSSU, NBU staff estimates. Source: NBU, Info Sapiens.
 The actual consumer inflation in February was below the trajectory of the NBU’s forecast published in
the January 2024 Inflation Report. This was due to an increased supply of certain food products and
effects from the strong last year’s harvests
 Core inflation also slowed. The easing of underlying inflationary pressures was facilitated by the
reduced pressure from the business costs, in particular for raw materials and energy, the situation in
the FX market remaining under control, and improved inflation and exchange rate expectations of
certain groups of respondents
 Meanwhile, the core inflation slowdown was restrained by the effects of the western borders blockade
on the supply of certain food and nonfood products and an increase in labor costs
 According to the NBU's estimates, inflation continued to decline in March 9
Nonfood products continued to grow cheaper, while price growth
for foods somewhat decelerated
Selected CPI components*,% yoy Contributions to the annual change in food prices*, pp
60 100 40
35
50 80 30
Foods,% yoy
40 25
60
30 20
40 15
20 10
20 5
10
0 0
0
-5
-10 -20 -10
01.22 07.22 01.23 07.23 03.24 01.22 07.22 01.23 07.23 03.24
Food prices Administered prices Bread Cereals, pasta Meat
Fish Dairy products Eggs
Nonfood prices Service prices
Oil products Vegetables Fruits
Fuel prices (RHS) Sugar Other
* Data for March reflects nowcast. * Data for March reflects nowcast.
Source: SSSU, NBU staff estimates. Source: SSSU, NBU staff estimates.
 A significant supply of food products amid warmer weather conditions, further effects from the large
harvests of 2023, and the reorientation of certain producers to the domestic market, restrained the
growth of food prices
 On the other hand, the growth in prices was fueled by a reduction in the supply of quality products (in
particular, potatoes and apples), as well as smaller supply of imported products (cheeses, butter)
 Nonfood prices continued to decrease slightly, primarily due to a deeper decline in prices for clothing
and footwear. Growth in services prices slowed, primarily amid eased pressure from the business costs
for raw materials and energy
10
Administered inflation was moderate. Fuel prices resumed growth

Fuel prices, UAH / L Contributions to the annual change in administered

prices, pp
60 20
55 Administered prices, % yoy
50 15
45
40
10
35
30
25 5
20
15 0
01.22 07.22 01.23 07.23 01.24
03.24 01.22 07.22 01.23 07.23 03.24
Alcohol Tobacco Utilities Transport Other
А 95 А 92 Diesel LPG

* Data for March reflects nowcast.

Source: minfin.com.ua, NBU staff calculations. Source: SSSU, NBU staff estimates.

 Fuel prices resumed growth in February. This was primarily driven by supply chain disruptions, which
mainly affected the prices of LPG, as well as by the rise in global crude oil prices due to the tensions in
the Red Sea
 The growth in prices for alcoholic beverages and tobacco products slowed further on the back of a
shadow market supply and reduced pressure from the raw materials and energy costs
 The administered inflation was also restrained by a moratorium on raising some utility prices

11
Ukraine: Economic activity
Business sentiments have improved, but economic recovery is
likely to be slowed by more intense shelling
NBU's business activity outlook index (BAOI), sa, p Contributions to the annual increase in the
60 number of new individual entrepreneurs by type
of activity*, pp
55 350
BAOI 550
50
300
500
45
40 250
400
35
200
350
30
01.22 07.22 01.23 07.23 03.24 150
300
Industry Construction Trade Services
A level above 50 indicates mainly positive expectations. 100
Survey was not conducted from March to May 2022. Source:
NBU. 50 % yoy
 The index of business expectations in March
indicated a further recovery of economic activity 0
 Favorable weather and the activation of projects for
the development of logistics, warehouses for -50
11.22 03.23 07.23 11.23 03.24
agricultural products and commercial real estate in
Agriculture Mining
the western regions led to an improvement in Processing Energy
business sentiments in construction Construction Transport and post
 Sowing of spring crops has started in all regions. Trade Restaurants and hotels
Farmers note a decrease in the costs of production ІТ Finance and insurance
Services Education, health care
components (fertilizers, pesticides, seeds, and fuel)
* In order to improve visual perception, the official names
and a higher supply of them, but they note the of types of economic activity according to the
increasing lack of workers. Animal husbandry Classification of Types of Economic Activity were
continued to revive, although milk and meat shortened.
13
processing slowed seasonally in March Source: opendatabot.ua; NBU calculations.
A revival of consumer and trade activity also took place

Performance indicators of the restaurant industry, % The first registration of passenger cars, thousand
units
120%
120 8
The effect of customs clearance of used

Тисячні
100 cars on foreign registration 7
80% 6
80 5
60 4
40% 40 3
2
20 1
0% 0 0
02.22 06.22 10.22 03.23 07.23 11.23 03.24 01.22 07.22 01.23 07.23 03.24
Turnover in nominal terms Used New (RHS)
Turnover in real terms Source: Ukravtoprom.
Number of working businesses
Source: SSSU, Poster, NBU staff estimates.
Components of the consumer sentiment index, p
120
 Consumer sentiments also improved in March.
This supported further growth in consumer 100
demand and retail trade, including new store 80
openings; a number of networks are automating
business processes to mitigate the problem of 60
lack of workers 40
 Sales of new passenger cars continued to grow
(by 17.5% mom and by 49% yoy) 20
01.22 07.22 01.23 07.23 03.24
 The deterioration of restaurant business turnover Index of Current Personal Financial Standing
indicators in the second half of March signaled Index of Propensity to Consume
about hampered recovery in the service sectors Index of Expected Changes in Personal Financial Standing
due to increased shelling and power outages From March 2023, the survey method was changed from
14
face-to-face to telephone interviews. Source: Info Sapiens.
The stable operation of the sea corridor supported transportation
and metallurgy
Average daily production of steel, cast iron and Rail freight transportation, million tons
rolled steel, thousand tons 30
70 February March
25
60 29.2% yoy 31.1% yoy

50 20
40 15
30
10
20
10 5
0
0
01.22 07.22 01.23 07.23 02.24
01.22 07.22 01.23 07.23 03.24
Cast iron Steel Rolled steel
Source: Ukrmetalurgprom. Source: SSSU, Rail.insider, UZ

 In March, a number of metallurgical enterprises carried out equipment repairs, including in view of
plans to increase the loading of mining and metallurgical units thanks to the improved sea logistics
 State and private coal-mining enterprises maintained production pace and expanded facilities; new gas
production wells were launched. At the same time, at the end of March, activity in the industry slowed
down due to shelling and blackouts
 Against the backdrop of early sowing, the production of fertilizers intensified
 The work of sea ports further supported the transport industry. In March, railway cargo transportation
continued to grow by 31% yoy and 10% mom. Although as a result of shelling in late March and a
decrease in stocks of agricultural products, a certain slowdown in sea transportation is expected
compared to February

15
Ukraine: Labor market
Labor demand continued to grow. However, more and more
businesses were facing difficulties in finding employees
Number of new job openings, four-week rolling Staffing problems index*
average, thousands
70 35
60 30
25
50
20
40
15
30
10
20 5
10 0
01.23 03.23 05.23 07.23 09.23 11.23 01.24
0
01 02 03 04 05 06 07 08 09 10 11 12
Skilled workers Unskilled workers
2019 2020 2021
*Difference between the shares of answers “finding employees
2022 2023 2024 has become more difficult” and “finding employees has
become easier”.
Source: work.ua, NBU calculations. Source: IER.

 An increase in the number of new job postings on job search sites indicated a steady demand for labor
in early 2024
 At the same time, according to business surveys, more and more companies were facing difficulties in
finding both skilled and unskilled workers

17
Labor supply remained tight, in part due to continued migration

Number of new resumes, four-week rolling average, Number of migrants, m persons

thousands
160 9

x 1000000
8 Methodology
140 7 change

120 6
5
100
4
80 3
60 2
1
40 0
01 02 03 04 05 06 07 08 09 10 11 12 01.22 07.22 01.23 07.23 01.24
2019 2020 2021

2022 2023 2024 All migrants abroad Temporary protection in the EU

Source: work.ua, NBU calculations. Source: UNHCR, Eurostat.

 The number of job seekers, as measured by the number of resumes posted on job search sites,
continued to decline. This may be a result of both the recovery in employment and the limited supply of
labor, in part due to mobilization and further migration
 According to the UNHCR, the number of migrants outside Ukraine since the beginning of 2024 has
increased by almost 150 thousand (2%) to 6.5 million people, as of 14 March

18
Deficit of personnel spurs upward pressure on wages

Indirect indicators for estimating real household Average salary offered (in job openings) and
income*, % yoy expected (in resumes), UAH thousand
30
20 21

Тисячні
10
0 20
-10 19
-20 18
-30
-40 17
-50 16
01.22 07.22 01.23 07.23 03.24 15
Average pension
Wage, estimated by Pension Fund 14
Full amount of SSC 13
Private sector SSC
PIT 12
* Deflated by CPI. ** The private sector SSC is calculated as 01.22 01.23 01.24
the difference between total SSC and SSC on wages from the
consolidated budget. expected wage offered wage
Source: Pension Fund of Ukraine, STSU, SSSU, NBU
calculations. Source: work.ua.

 Because of the mismatches between labor supply and demand, there is increasing pressure to raise
wages from both job seekers and employers. The increase in the minimum wage at the start of the
year also had an impact
 Wage growth, significant budget expenditures on military allowances, pension indexation (in March),
and increases in payments linked to the minimum wage all contributed to higher household incomes,
which in turn supported consumer demand

19
Ukraine: Fiscal sector
The budget deficit remained moderate, despite the record amount
of international aid
Main state budget indicators* (monthly), UAH bn State budget balance financing** (excluding grants
from revenues), UAH bn
600 400
500 300
400
200
300
200 100
100 0
0 -100
-100
-200
-200
-300
-300 03.22 07.22 11.22 03.23 07.23 11.23 03.24
-400 External borrowings Grants
03.22 07.22 11.22 03.23 07.23 11.23 03.24 UAH gov't bonds & bills FX gov't bonds & bills
NBU gov't bonds & bills Other financing
Balance Revenues Expenditures Deficit ("-" surplus)
* Dotted and patterned fillings show relevant indicators excluding grants. Balance includes net lending. ** Debt transactions are
net borrowings. Other financing represents active operations (in particular, includes the change in volumes of gov`t funds) and
privatization proceeds.
March – preliminary and high-frequency data from the MFU website. NBU calculations based on the MoF’s website data.
Source: Treasury, MoF, NBU staff calculations.
 In March, the state budget deficit, excluding grants from revenues, remained unchanged from the previous
month. In January - March, the deficit was smaller than last year. This was, in particular, due to the further
growth in revenues amid a moderate increase in expenditures
 In March, budget needs were mainly financed by international financial assistance from partners, the
volumes of which were record high in March at about USD 9.0 bn. The international aid also help
accumulate funds to cover budget needs in the next few months
 Domestic borrowings, primarily in the national currency, were also an important source of financing budget
needs. Their volumes are gradually increasing (the rollover of domestic debt securities in national currency
in Q1 was 187%) 21
Revenues grew despite the negative impact of the blockade of the
western borders on proceeds from imported goods
Revenues* of the state budget’s general fund, UAH Growth in tax revenues of the state budget’s
bn general fund in 2024, monthly*, % yoy
240 200

200 160
120
160
80
120 40
80 0

40 -40
-80

PIT

Domestic
subsoil use

Import
CIT

Excise

international
0

VAT
Taxes on
Rent on

VAT
03.22 07.22 11.22 03.23 07.23 11.23 03.24

trade
Other revenues Grants Domestic VAT
Import VAT CIT PIT

* March – preliminary data from the MFU website. NBU calculations based on the MoF’s data.
Source: Treasury, MoF, NBU staff calculations.

 In March, the general fund revenues, excluding grants, continued to grow (by more than 50% yoy),
although the pace slowed down (the latter was due to the advance transfer of dividends from certain SOEs
in February)
 The growth was supported by both economic factors (economic activity revival, improvement of financial
results of enterprises in 2023, a slightly weaker hryvnia exchange rate) and administrative factors (effects
of an increase in the minimum wage and in the CIT rate for banks). Simultaneously, the blockade of the
western borders continued to have a negative impact on proceeds from imported goods, although their
losses decreased in March
22
Expenditure growth remained moderate

Contributions to annual changes in expenditures of Expenditures of the state budget, UAH bn

the state budget*, pp (functional classification) (economic classification)
200 600
Expenditures, % yoy
160 500
120 400
80 300
40 200
0 100
-40 0
03.22 07.22 11.22 03.23 07.23 11.23 03.24 03.22 07.22 11.22 03.23 07.23 11.23 03.24
Social security Health care Wages Military allowance
Education General public services Goods and sevices Pensions
Economic activity Defense and security Other social benefits Other current expenses
Other Capital expenditures Expenditures

* March – preliminary data from the MFU website. NBU calculations based on the MoF’s data.
Source: Treasury, MoF, NBU staff calculations.

 In March, expenditures increased by about 15% yoy. Defense and security, as well as social care,
remained the priority spending directions. Moreover, there was a catch-up of expenditure on military
allowances and health care
 However, the overall expenditure growth was moderate, despite the record level of international aid in
March. This is likely related to the need to accumulate funds in future periods, given the continued
uncertainty about the timing and amount of the assistance from the United States

23
Ukraine: Balance of Payments
In February, narrowing of the external trade deficit continued due
to a reduction in both goods and services imports
Current account balance, USD bn Merchandise trade balance, USD bn

5 8 0.5
4 7 0.0
3
2 6 -0.5
1 5 -1.0
0
-1 4 -1.5
-2 3 -2.0
-3
2 -2.5
-4 Current account balance
-5 1 -3.0
01.22 07.22 01.23 07.23 02.24 0 -3.5
Other operations
Official grants 01.22 07.22 01.23 07.23 02.24
Interest payments
Dividends and reinvested earnings Merchandise trade balance (RHS)
Remittances (gross) Exports of goods
Services (net) Imports of goods
Goods (net)
Source: NBU staff calculations. Source: NBU staff calculations.

 In February, the goods trade deficit continued to narrow: the imports of goods decreased due to the
reinstatement of the blockade, and the imports of services decreased due to further adaptation of
Ukrainians abroad and changes in their residency status. Meanwhile, the exports of goods remained at
January levels
 The inflow of international financial assistance in the form of grants offset significant volumes of interest
payments on external liabilities
 As a result, the current account was almost balanced

25
The reinstatement of the blockade of the western borders in
February had a greater impact on the imports of goods...
Imports of goods, USD bn Imports of energy products, USD bn

8 1.6
7 1.4
6 1.2
5 1.0
4
0.8
3
0.6
2
0.4
1
0.2
0
01.22 07.22 01.23 07.23 02.24 0.0
Energy Machinery Chemicals 01.22 07.22 01.23 07.23 02.24
Coal Oil
Foods Industrials Metallurgy
Petroleum products Natural gas
Other goods Other energy products

Source: NBU. Source: NBU.

 In February, there was no usual for this month increase in the imports of goods due to the reinstatement
of the blockade of the western borders. According to NBU estimates, import losses in February
amounted to USD 350-400 million.
 The purchases of food products (fish, fruits/nuts), industrial goods (clothing, footwear), and woods
decreased the most
 However, the imports of petroleum products and certain chemical products (fertilizers and
pharmaceuticals) increased. This may indicate both a lower intensity of border blocking for automotive
transportation of military goods and a redirection of these purchases to other trade and transportation
routes 26
...while the operation of the sea corridor ensured stable volumes
of merchandise exports
Exports of goods, USD bn Exports of goods, t m

6 18
16
5
14 annual average
4 12
10
3
8
2 6
4
1
2
0 0
01.22 07.22 01.23 07.23 02.24 01.21 07.21 01.22 07.22 01.23 07.23 02.24
Foods Mineral products Grains Fats and oils Ores
Chemicals Wood&Wood products
Industrials Metallurgy Ferrous metals Other goods
Machinery Other goods
Source: NBU. Source: SCSU, NBU staff calculations.

 In February, the volumes of grain exports were the highest since the beginning of the full-scale invasion
and were only slightly lower than in January 2022
 At the same time, the exports of mining and metals products slowed down somewhat. Due to the
orientation of these products towards Asian countries, this could be caused by the crisis in the Red Sea
and weakening demand from China
 Overall, the exports of goods in January-February was closest to the levels before the full-scale invasion

27
Less regular official financing led to a decrease in gross reserves
in February. However, they increased in March again
International financial assistance since the beginning International reserves, USD bn
of the full-scale war, USD bn
10 45
9 0.9 40 Current level of FX
8 0.2 reserves
35
7
30
6
25
5 0.9
4 2.7
1.3 0.7 8.0 20
1.31.5 1.0 1.3
3.0 0.9 15
3 1.4 1.3 2.3
2 0.1 1.31.31.2 1.31.2 3.9 10
2.0 2.9 3.3 3.4 3.2 0.8
0.70.6 2.7 2.6 1.4
1 1.9 2.1 1.7 1.6 1.72.01.7 1.61.71.62.0 0.1 5
0.91.0 0.5 0.7
0 0.3
0
09.22

02.24
03.22
04.22
05.22
06.22
07.22
08.22
10.22
11.22
12.22
01.23
02.23
03.23
04.23
05.23
06.23
07.23
08.23
09.23
10.23
11.23
12.23
01.24
03.24

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
02.24
Loans and guarantees Grants IMF
Net international reserves IMF credit

Source: NBU, MFU, open sources data. Source: NBU.

 Due to less regular disbursements of international financial assistance, a capital outflow was generated
under the public sector of financial account in February, and reserves decreased to USD 37.1 bn
 Meanwhile, due to significant volumes of international financial inflows in March reserves increased

28
Ukraine: Monetary sector
The situation in the FX market remained under control and
exchange rate fluctuations were moderate
Bank clients’ FX transactions* and NBU Hryvnia exchange rates, UAH per USD
interventions, USD bn
0.5 45
0.0
-0.5 40 0.3%
-1.0
-1.5
35 17.0%
-2.0
-2.5
-3.0 30
-3.5 28.2%
-4.0 25
01.22 07.22 01.23 07.23 03.24 01.22 07.22 01.23 07.23 01.24
03.24
NBU's interventions (value date)
Balance of customer operations Official exchange rate Cash market ask
* Net sale and purchase of noncash and cash foreign
currency by bank clients (Tod, Tom, Spot).
Source: NBU. Source: NBU.

 In March, the official exchange rate of the hryvnia against the US dollar fluctuated in both directions,
moderately devaluing at the end of the month as a result of a certain worsening of the supply and
demand balance in the FX market in the second half of March. This was owing to:
• revival of spring field work, which was followed by an increase in the FX demand from importers of fertilizers
and plant protection products
• growing need for energy imports, including due to the intensification of attacks on the energy sector
• activation of budget expenditures with the arrival of significant amounts of external financial assistance in the
second half of the month
• the end of the annual and quarterly tax payment period
30
 Under such conditions, the NBU increased net FX sales (up to USD 1.8 bn)
NBU resumed the key policy rate cut cycle to support economic
recovery without posing threats to macrofinancial stability
Interest rates on NBU open market operations and Yields on hryvnia domestic government T-bills
Ukrainian OverNight Index Average (UONIA), % & bonds, % per annum
30 28
26
26 24
22
22 20
18
18
16
14 14
12
10 10
01.23 07.23 01.24 07.22 01.23 07.23 03.24
Key policy rate Three-month CDs Up to 1 Y, primary market
UONIA Overnight CDs More than 1 Y, primary market
Overnight loans Up to 1 Y, secondary market
More than 1 Y, secondary market
Source: NBU. Source: NBU.

 A further decline in inflation, sustained stable FX market conditions, and positive developments in the
prospects to receive external assistance enabled an earlier resumption of the easing cycle of interest
rate policy
 The new level of interest rates on the NBU’s operations is sufficient to maintain the attractiveness of
hryvnia assets, safeguard exchange rate sustainability and retain moderate inflation
 The operations with three-month CDs will remain a strong incentive for banks to increase their
portfolios of hryvnia household term deposits
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The yields on hryvnia instruments remained positive in real
terms
Real interest rates* on hryvnia domestic Hryvnia deposits* of individuals, UAH bn
government bonds and deposits of individuals, %
16 800

12
600
8
4 400
0
200
-4
-8 0
01.21 07.21 01.22 07.22 01.23 07.23 01.24 04.23 07.23 10.23 01.24
Weighted average interest rates on individuals Term On demand
deposits, more than 92 days
Yields on domestic government bonds, more than 1
year, secondary market
* Deflated by households’ 12-month-ahead inflation
expectations. Preliminary data.
Source: NBU calculations. Source: NBU.

 Yields on bank deposits and domestic government debt securities continued to exceed inflation
expectations of businesses and households. Together with the controlled situation in the FX market,
this supported economic agents’ interest in domestic currency savings
 As a result, the demand for hryvnia assets stayed solid. In particular, Ukrainians’ holdings of domestic
government debt securities increased, and retail term deposits of individuals showed steady growth

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