The further tightening of U.S. monetary policy will increase risks of the significant capital outflow from developing countries, including Ukraine, according to NBU financial stability report.
Thus, according to the estimates of the International Institute of Finance (IIF), Ukraine, China, RSA, Turkey and Argentina are the most vulnerable to changes of “risk appetite” among investors and capital outflow. “The market already reflects a weak position of the last two countries: from the beginning of the year, the eurobonds of these countries have significantly decreased in price”, the report says.
It is noted that these risks for Ukraine will significantly strengthen the necessity of entering the foreign loan market by the year-end, irrespective of continuing cooperation of our country with International Monetary Fund.
The National Bank added that U.S. monetary policy becomes increasingly tighter that can cause the capital outflow from risk assets and developing countries, and the signs of realization of this scenario are observed in the last months. Under the influence of the strict monetary policy, the dollar strengthens, and the countries react to it in different ways.
It should be reminded that in December 2017, NBU changes the procedure of individual license issuance for foreign currency transfer beyond Ukraine for preventing the capital outflow abroad.
