In January 2017, the money supply  contractedby 3.3%   to UAH 1,066.1 billion, driven by a reduction in cash outside banks (by 6.2%) according to preliminary monetary statistics data for January 2017.

In January 2017, the stock of deposits shrank by 1.8%, including a 2.3% decline in hryvnia deposits. In January, a reduction in deposits was mainly due to base effects, as strong deposit growth recorded in December 2016 was attributed to significant budget expenditures, including advance pension payments, and  record high repayment of VAT refunds. In January 2017, the stock of FX  deposits edged down by 1.8%, including a 1.3% decline in retail deposits.

 In January 2017,  banks’ lending activity continued to be affected by high debt burden, primarily high corporate sector leverage.  A seasonal decline in business activity was yet another restraining factor. As a result, banks’ corporate loan portfolio declined by 1.6% in January 2017, including that in domestic currency - by 0.8%.  Meanwhile, balances of retail loans in domestic currency went up by1.6% . In January, balances of loans in domestic currency declined by 0.4%, while those in foreign currency (in dollar terms) decreased by 2.0%.

In January 2017, following a slight increase in December, the cost of corporate loans in diomestic currency resumed declines. Overall, in annual terms, the cost of business loans in domestic currency went down by 4.5 pp  to 14.9%  per annum in January 2017.

See the Macroeconomic and Monetary Review (January 2017) for greater details on money market developments.