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. Last Updated: 07/27/2016

Investors Shun Kiev Treasuries




KIEV -- Ukraine's Finance Ministry failed to sell 308-day and 364-day discount treasury bills at auctions Wednesday, the Central Bank said.


The ministry, however, did manage to sell 128-day paper although its average yield slipped to 71.96 percent from 73.08 percent at previous auction July 21.


Dealers said yields on Ukrainian paper were set to slip. "Yields will slide slowly," said Olexsiy Molotkovych of Mriya bank in Kiev.


He also said a decree signed by Ukrainian President Leonid Kuchma on freeing investors from profit tax on treasury bills would boost demand from Ukrainian commercial banks for short-term paper.


The decree is due to come into force this week if the Ukrainian parliament, dominated by left-wing parties, does not veto it.


Dealers also predicted long-term paper would fail to sell in future auctions as investors were uncertain of the stability of Ukraine's hryvnia currency.


Ukraine's government on Wednesday forecast the hryvnia would depreciate to 2.42 hryvnias per dollar by Dec. 31, 1999 with the average exchange rate at 2.27 hryvnias per dollar over the course of the next year.


Meanwhile, the speaker of Ukraine's parliament indicated Wednesday that lawmakers will not insist on debating the government's 1998 budget before it is put into effect.


The decision will likely speed up implementation of the budget, including measures required for an international loan, and stave off a prolonged battle between Kuchma and lawmakers.


The proposed budget calls for reducing the budget deficit by 1 percentage point to 2.3 percent of gross domestic product, a key requirement of the International Monetary Fund, which is considering a $2.5 billion loan for Ukraine.


Many leftist lawmakers are opposed to budget cuts and want more money for social programs, even if it means increasing the deficit. ()