On 12 February 2018, the National Bank of Ukraine (NBU) will suspend offering certificates of deposit with a three-month maturity, since the Ministry of Finance will return to the short-term sovereign debt market.
Please be reminded that the NBU resumed offering certificates of deposit with a three-month maturity in September 2017, considering that the Ministry of Finance did not issue three-month domestic government bonds, and contracts’ maturity on the interbank lending market as a rule do not exceed two weeks and as a result prices for three-month hryvnia instruments were not established. This complicated the pricing for other instruments, such as FX forwards. Instead, reissue of three-month certificates of deposit fostered shaping the yield curve and boosted effectiveness of the NBU monetary policy transmission mechanism.
However, today, the monetary market has other indicators of three-month hryvnia instruments pricing and respectively the yield curve on the respective segment can be shaped without offering three-month certificates of deposit of NBU.
First, the Ministry of Finance offers three-months domestic government bonds on regular basis. Second, at present the volume of circulating domestic government bonds with short-term maturity is sufficient (said securities with an up to three-month maturity account for UAH 14.4billion). Respectively, market players have enough instruments for trading and regularly enter in agreements on domestic government bonds with up to three-month maturity on the secondary market.
At the same, time the NBU does not exclude the possibility of reissuing three-month certificates of deposit, if the situation changes and as necessary for the effectiveness of the NBU monetary policy transmission mechanism.