Speculative currency as came to us, it will come
THAN TO BUY MORE GOVERNMENT BONDS, THE MORE STRENGTHENED THE HRYVNIA. FOR HOW LONG?
Since the beginning of the year, non-residents increased their portfolio of government bonds in national currency at 15.4 times:
– from 6.3 billion to 97.8 billion UAH (27.09.2019).
To buy government bonds in national currency non-residents sell dollars, thereby increasing the supply of foreign currency.
The inflow of speculative currency from non-residents since the beginning of 2019 amounted to $3.8 billion, which is 10.5 times higher than last year ($370 million).
This factor has played and continues to play a key role in the strengthening of the hryvnia and the depreciation of the dollar since the beginning of the year fell by 12.2% from 27.5 UAH/$ at the beginning of the year to 24.1 UAH/$ (27.09.2019 on).
All is good, but there are THREE “small” caveat.
THE FIRST CAVEAT. The money from sold t-bills to Finance the budget deficit and not for investment projects. That is to say, eating away. And sky-high interest rates paid from the budget, i.e. from the money of Ukrainian taxpayers.
THE SECOND CAVEAT. On the background of 15-fold increase in the influx of speculative currency, foreign direct investment in Ukraine this year (and previous years) continue to decline.
THE THIRD CAVEAT. Speculative currency from non-residents (unlike foreign direct investment) went to Ukraine, so at any time it may come out.
After all, why the residents are so willing to buy Ukrainian bonds?
Yes, because they earn up to 30% (!) per annum in foreign currency – 15-19% yield of t-bills plus 10-15% on the strengthening of the hryvnia (for example, in January, non-residents sold dollars at UAH 27-28/$, and in September bought on 24-25 UAH/$).
If at any time, for any internal or external reason (slowing of the world economy, the global financial crisis, the sharp drop in world prices for metal, ore, grain, etc.) speculators are non-residents will lose interest in Ukrainian government bonds and decide to take profits and, accordingly, to withdraw the currency from the Ukraine, the speculative-revalvatsionnye cross (see Chart) to instantly turn into a speculative devaluation (the blue line will go down, and the red – up).
In principle, it is logical, because such a cross to bear on all raw agricultural deindustrialization economy, which, unfortunately, is the Ukrainian economy.
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