Ukrainians began to invest much more often in bonds of the domestic government loan. Currently, citizens buy OVDP bonds three times more often than before the full-scale war. Such activity on the market shows confidence in the national currency and contributes to the strengthening of the hryvnia exchange rate.
“As of the end of April, the population’s deposits in domestic state loan bonds are twice as large as they were at the beginning of 2023, and three times larger than before the war. Today, the population has invested more than UAH 60 billion in domestic state loan bonds,” the head of the National Bank notes of Ukraine Andriy Pishnyi.
Businesses and foreigners are also buying bonds
The total portfolio of military bonds owned by individuals and legal entities as of May 1, 2024 amounted to UAH 113.6 billion equivalent compared to UAH 52.6 billion equivalent as of May 1, 2023. That is, the total volume of investments in bonds of citizens and businesses increased by 2.2 times.
Foreigners bought OVDP in the amount of UAH 13,862.8 million, USD 24.3 million. USA and 0.1 million euros. Over the year, this figure has almost tripled.
“In general, from the beginning of the full-scale war until April 30, 2024, the government raised 657,052.4 million UAH, 6,380.9 million US dollars and 2,270.3 million euros at the primary auctions, and 455,494.7 million was allocated to repayment of OVDP hryvnias, 6,946.5 million US dollars and 1,806.1 million euros”, – reported in National Bank.
How does it help the economy?
Active demand for bonds contributes to the strengthening of the hryvnia exchange rate. The sale of OVDP attracts additional funds to the country’s economy. This allows banks to lend more actively to businesses.
“Funds from the sale of OVDP are a resource that Ukrainian banks can and should use to develop business lending. And this topic is now a special focus of the National Bank. We are developing a strategy for the development and restoration of lending, because we managed to ensure exchange rate stability and macro-financial stability , a sufficient level of capital, operational profitability of banks, their sufficient liquidity”, – notes the head of the NBU, Andriy Pishniy.
