Decrease in currency deposits in Ukraine
In Ukraine, there is a significant decrease in the volume of currency deposits held by individuals in banks, which amounted to UAH 446 billion in the third quarter of this year. This is UAH 28 billion less than in the second quarter, when currency deposits stood at UAH 474 billion. In this situation, hryvnia deposits are becoming increasingly attractive to depositors.
Attractiveness of hryvnia deposits
The interest rate on hryvnia deposits can reach 17.5% per annum, which significantly exceeds the rates on currency deposits. For example:
- A deposit of UAH 20,000 for one year at an annual rate of 14.5% will bring UAH 2,079 in net income after taxes.
- The net profit from a dollar deposit at an annual rate of 1.2% will amount to only $4.43.
This indicates a significantly lower profitability of currency deposits.
Expert Andriy Shevchishin notes that the NBU statistics take into account all funds in banks, underscoring the overall trend of outflow from currency deposits.
Inflation is projected to decrease to 9.2-10% on an annual basis, and monthly inflation by the end of the year will not exceed 1.5%. This may also contribute to increased interest in hryvnia deposits, as lower inflation raises the real profitability of hryvnia deposits.
Thus, given the current situation, hryvnia deposits appear to be more profitable than currency deposits. This may become an important factor for depositors who are looking for ways to preserve and increase their funds in an unstable currency market.
The decline in the volume of currency deposits in Ukraine indicates a change in depositor sentiment, who are likely seeking more stable and profitable investment opportunities amid economic instability. The rise in rates for hryvnia deposits, combined with decreasing inflation, may stimulate further transitions of depositors from currency deposits to hryvnia ones, which may affect the overall liquidity of the banking sector.