The FINANCIAL -- Open Joint Stock Company Raiffeisen Bank Aval has mandated The Bank of Tokyo Mitsubishi UFJ, Ltd, Bayerische Landesbank, HSBC Bank plc and Intesa Sanpaolo S.p.A. to arrange a 364 days US$100 million Syndicated Term Loan Facility for Raiffeisen Bank Aval. “Proceeds will be used for general corporate funding requirements, including but not limited to trade-related transactions”, bank reports.
Raiffeisen Bank Aval was founded in 1992. It has a full licence to conduct banking operations in Ukraine both in local and foreign currency. Raiffeisen Bank Aval is a universal bank with over 4.1 million retail customers. The bank has one of the largest networks with 1,300 outlets throughout the country and focuses on providing customers with a complete range of financial products and services, which also includes the services provided by subsidiaries Raiffeisen Leasing Aval.
In 2007 inflation may reach 12 percent — Raiffeisen Bank Aval Analyst
According to State Statistics Committee, in September consumer prices index grew for 2.2 percent comparing to the previous month, which is the highest monthly CPI growth rate since December 2004.
Dimitry Sologoub, Analyst of Raiffeisen Bank Aval, believes that the main reasons for inflation hike in September are sharp increase in prices for several food products — meat and diary products, sunflower oil and butter, caused by supply-side factors. Specifically, food production costs have jumped upwards due to poor harvest and rising prices for other inputs (PPI grew for almost 20 percent comparing to the same period of the last year).
High food prices growth in Ukraine is in line with the international food markets trend as adverse weather conditions have damaged the harvest all over the world thus driving food prices up. The Analyst of Raiffeisen Bank Aval projects that inflation in 2007 will definitely exceed 10 percent and most probably will end up around 12 percent, as prices for certain food products are likely to continue rising.
USD/EUR exchange rate is likely to fluctuate around 1.4 level in short-term perspective
The dollar/euro exchange rate has recently fallen to historical lows and now is lower than 1.4 USD per EUR. Dimitry Sologoub, Analyst of Raiffeisen Bank Aval, considers further dollar weakening against euro as unrealistic because of several factors.
Specifically, European politicians are putting the pressure on the European Central Bank to stop the appreciation of euro against dollar, since strong euro is hurting economic growth in European Union.
Besides, interest rate cut by Federal Reserve in September calmed down the financial markets, thus reducing depreciation pressure on dollar. Furthermore, recent US labor market data is much more positive than was expected. Therefore, in opinion of financial analysts, the further interest rate cut in US is becoming less likely that, in turn, will strengthen dollar positions.
At the same time, Dimitry Sologoub adds, the sharp appreciation of dollar against euro in short-term perspective is equally unlikely as well. First of all, despite recent positive economic news from the US, the scale of the problems in American economy still remains unclear. Housing market slump might cause fall in consumption, which is a main driving force of the economic growth in the US.
Second, economic growth in Europe at the moment looks more sustainable than in US. Besides, European Central Bank is strongly committed to the goal of low inflation
"Therefore, we may expect that the ECB will raise key interest rate as soon as global credit squeeze would ease. And interest rate increase in Europe will play for euro strengthening", — Analyst of Raiffeisen Bank Aval said.