News
BY: Positive – IMF mission in Minsk 1-13 June (p2)
CZ: Neutral – CNB Singer said the CNB may raise interest rates sooner than previously forecast (p2)
HU: Neutral – April banking data show little improvement in lending & foreign exposure, 1Q11 investment improves vs. 4Q10 (p2)
LV: Positive – Latvia starts Eurobond issue roadshow (p2)
PL: Neutral – GDP up 4.4% yoy in 1Q, in line with expectations, private consumption remains a key pillar of economic growth (p3)
TK: Positive – April trade deficit better than expected (p4)
UA: Positive – April C/A deficit posts a marginal improvement (p4)
Today’s Events
SK: C/A Balance / LT: Avg Monthly Gross Wages yoy / SK: State Budget Cumulative Balance / RU: CPI wow / RO: Foreign Currency & Gold Reserves Total / KZ: CPI yoy / EE: Unemployment Rate / CZ: State Budget Cumulative Balance
EEMEA Markets
The IMF announced that it is sending its regular mission to Minsk (1-13 June) to do “post-program monitoring” of the economy. We see this as supportive, against a background of highly politically charged decisions on the privatisation process that were echoed by president Lukashenko. We see a good probability that this could eventually lead to an IMF program, although the government would actually need to request one and be willing to fullfil the conditions associated with the it. We should also have more clarity on the EurAsEc package by 4 June when the finalization of the agreement might take place. We still see the loan going ahead as Belarus is in need of funds to exert more control over its FX rate (cont’d on page 2).
We have seen a sudden spike in O/N Kiev rates to 11.4% in the past few days, we believe this is related to 1) liquidy shortage, the amount of funds on correspondent accounts of NBU has dropped 23% in May. We see this being related to state-owned banks limiting their presence on the market to support the UAH (stopped placing funds on deposit with other banks causing a shortage). 2) Local banks potentially financing Naftogaz ahead of the monthly gas payment on 6 June. 3) hang-over from the 1Q tax payment period (profit, VAT) that triggered the initial decline in liquidity as soon as it ended on 20 May. We expect the rate to normalize as soon as the Naftogaz financing is out of the way, leading to a decline in rates as early as end of this week/start of next week proportionate to the decline we saw at the end of December (at the time rates collapsed from over 10% to under 2%).
Click here to read the full report:
http://www.easyforexnews.net/uploads/2011/06/eed_fi_010611_0000.pdf
UniCredit Research