20 Jun 2024 12:32

De-dollarization of deposits in Ukraine at a halt now - NBU

MOSCOW. June 20 (Interfax) - The share of Ukrainians' fixed-term deposits in hryvni is stable, and the de-dollarization process has come to a halt, Ukrainian media said, citing the National Bank of Ukraine's (NBU) Financial Stability Report, published on Wednesday.

"The trend toward a decrease in the share of forex funds stopped due to the statistical effect of the weakening of the hryvnia's exchange rate in recent months and an increase in businesses' forex assets. The share forex funds in clients' deposits has been at around 32% since the beginning of this year, which is low by historical standards," the NBU said in the report.

The level of de-dollarization has slightly grown since the beginning of the year, it said.

Easing the forex exchange limits lowered demand for the service to exchange non-cash hryvni for forex, leading to a decrease in the number of Ukrainians' fixed-term forex deposits.

Ukrainian banks are reluctant to encourage forex deposits due to a limited number of areas for investing them, the NBU said.

"Given the high rates on forex assets, banks make additional profit in some situations, even keeping these funds in low-risk instruments, such as deposits at foreign banks and investment-grade bonds," the regulator said.

However, the NBU believes, expected key rate cuts in developed countries will weaken these earning options in the long term and will not create incentives for banks to encourage their clients to keep their deposits in foreign currencies.

As for the share of individuals' fixed-term deposits, it has edged down following a growth to nearly 40% at the beginning of the fall 2023, and is currently at a little over 36%.