OREANDA-NEWS. The analysis of the situation in the money market conducted in July suggests that positive money market trends kept on unwinding.

In July, annual CPI inflation stood at 0%.

A more balanced foreign exchange market contributed to maintaining price stability.

In particular, in the first seven months of 2013 the interbank foreign exchange market recorded the net foreign currency supply of USD 1.8 billion, whereas the net foreign currency demand of USD 3.4 billion was recorded in the respective period of the previous year.

The cash segment of the foreign exchange market also saw positive developments.

The supply of cash foreign currency had exceeded demand for foreign currency for the fourth month in a row. Overall, in the first seven months of 2013 the net demand for foreign currency was 30 times less than in the respective period of 2012,” noted Director of General Department of Monetary Policy Olena Shcherbakova.

Under these circumstances, the National Bank of Ukraine scaled down its operations in the interbank foreign exchange market, with market forces playing a key role in restoring the equilibrium in the market. In May-June, the regulator intervened by purchasing foreign currency, whereas in July it did not intervene in the interbank foreign exchange market.

According to Ms. Olena Shcherbakova, maintaining price stability had an impact on market expectations. Expectations stabilization led to the gradual reduction in demand for foreign currency in the cash and cashless segments of the foreign exchange market.

Over the first seven months of 2013, there has been a 17.8% rise in national currency deposits accompanied by a 0.6% decline in foreign currency deposits. As a result, in the January to July period the deposit dollarization indicator went down from 43.7% to 39.6%. This is a clear indication that market expectations have brightened up.

There has been some improvement in deposit maturity structure - in the first seven months of 2013, the share of long-term deposits within the stock of deposits has picked up by 4.4 percentage points to 39.1 %.

“The National Bank of Ukraine is committed to giving top priority to reinforcing the status of hryvnia as a medium of exchange and a store of value and decreasing the level of dollarization of the economy,” emphasized Ms. Olena Shcherbakova.

It is noteworthy to mention that according to the Constitution of Ukraine, the main function of the National Bank is to safeguard the stability of the monetary unit of Ukraine. When exercising its main function the National Bank shall proceed from the priority of achievement and retention of the price stability in the country.