Ukrainian financial market has come under pressure again
For the majority of financial markets in developing countries in Europe in August was a quiet month. The only exception was Ukraine, where the new rising tensions with Russia weakened the national currency and led to an increase in the yield of dollar bonds.
“August was a relatively good month for equity markets in all major European countries with developing economies, except for Ukraine”, – writes Liza Ermolenko, Capital Economics economist for emerging markets. In the Turkish stock market in early August, it was restored after the sale, following the military coup in July, but since then he has had time to fall back because of concerns about the growing Turkish involvement in the conflict in Syria.
Most regional currencies also strengthened or remained stable in avguste.Rossiysky ruble became the best currency Emerging Europe in August, supported by the rebound in world prices for neft.Tem time, Turkish lira continues to recover, and has played almost all of the losses (in relation to the US dollar) incurred after a coup attempt in July. It is noteworthy that the Turkish currency was more stable than the stock market, the events in Syria.
Meanwhile, hopes that the political crisis in Ukraine is close to the resolution was again broken by reports of clashes between Russian and Ukrainian parts of the Crimea the border in mid-August. This, combined with the outstanding issue of the allocation of Ukraine the next tranche of the IMF (the last tranche was allocated over a year ago), put pressure on the Ukrainian market.
The hryvnia weakened in August by 3% against the US dollar, while the yield on dollar bonds of Ukraine, which since the beginning of the year has gradually decreased, increased again.
Today Prime Minister of Ukraine Vladimir Groisman said that he sees no reason for the deterioration of the situation in the autumn, and by the end of the year the economy could return to growth.
“It’s too early to say how events will unfold. But the latest movements in the market are a reminder that the nascent recovery of the Ukrainian economy and its financial markets remains fragile, “- writes Liza Ermolenko, Capital Economics economist for emerging markets.
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