Jump to content
House Price Crash Forum
Sign in to follow this  
Sancho Panza

Ukrainian Banks Offering 20% On Savings

Recommended Posts

Bloomberg 18/9/13

'For Dmytro Arsentiev, the 20 percent interest he gets on his hryvnia savings at Ukraine’s No. 2 bank, offers enough protection from currency swings.

“Running around hectically like a rabbit to change money isn’t profitable now,” the 63-year-old pensioner, a retired computer consultant, said by phone from Kiev, the capital. “You lose on the conversion costs.”

Ukrainians, who endured a 40 percent devaluation five years ago, are ignoring warnings from banks including Goldman Sachs Group Inc. that another is on the way as lenders offer high deposit rates and the hryvnia holds firm to the dollar. After selling the currency en masse in 2012 in anticipation of a drop after elections, they’ve been net buyers for four consecutive months, the longest streak since 2005.

Reserves Dive

As policy makers sold foreign currency to support the hryvnia, central bank reserves have plunged to less than three months of imports, a threshold economists deem important for financial stability. The stockpile stood at $21.65 billion dollars at end-August, down from $30 billion a year earlier.

Retail deposits denominated in hryvnia surged 27.1 percent in the first eight months, while foreign-currency savings rose 1.6 percent, according to the central bank. As well as the hryvnia’s outperformance, depositors have been lured by an average 12-month interest rate of 17.59 percent, compared with 7.21 percent for dollars. Net hryvnia sales by citizens plunged to $136 million last month from $720 million a year earlier.

Weaker Forecasts

The currency may weaken by 30 percent as the government agrees to a bailout and succumbs to the IMF’s demands, which also include allowing more exchange-rate flexibility, according to Goldman Sachs. It will fall to 9.0 in the first quarter of 2014, according to the median estimate in a Bloomberg survey of nine economists.

Even with the memory of 2008’s 45 percent devaluation fresh in his mind, Arsentiev has no intention of changing his strategy, relying on his hryvnia-savings account at AT Oschadbank.

“Nobody can save his money from such a collapse,” he said. “You can change $100, $200, $300, but if it’s $3,000 or $4,000 you wouldn’t be able to convert it quickly enough.” '

Share this post

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   206 members have voted

    1. 1. Which of the Prime Minister's options would you choose?

      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.