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Kyiv, July 28 (Interfax-Ukraine) – If the hryvnia exchange rate were stable until the end of 2008, the average interest rates on one-year deposits denominated in the national currency could fall to 20-21% from 23-25%, Ivan Feskiv, the board chairman of Kyiv-based Kredobank.

"There is a potential for a fall in deposit interest rates. If the NBU [the National Bank of Ukraine] retains hryvnia exchange rate stability until the end of the year, average interest rates on one-year deposits could fall to 20-21%. If the NBU fails to prevent a sharp hryvnia devaluation, an outflow of deposits could be seen, and banks would have to encourage depositors with high deposit rates, which could grow to 25-27%," he told Interfax-Ukraine.

He said that if there is stability in the financial market, deposit interest rates denominated in U.S. dollars could fall to 9-10% by Q4, 2009 from 13%, and that for euros – from 11.5-12% to 7-8%.

"In the medium run, banks will more actively raise hryvnia deposits, as the NBU and parliament have minimized the opportunities to issue credits in foreign currency to individuals. If banks cannot issue credits in foreign currency, why should they raise a lot of deposits denominated in foreign currency? At present, some banks accumulate foreign currency to pay external debts, and the interest rates on foreign currency deposits are rather high. If the hryvnia exchange rate were stable, one should expect a fall in interest rates on dollar deposits to 9-10% and that for euro deposits – to 7-8% in the next 4-6 months," Feskiv said.

The banker said that deposit rates that jumped during the banking crisis have gradually stabilized.

The banker said that the trend for a gradual fall in deposit interest rates seen over the last two months is explained by the hryvnia's stability and the fall in inflation in summer compared to the start of the year.

Feskiv said that currently the most depositors place deposits for three to six months, which is linked with the recent cancellation of the moratorium on the early withdrawal of deposits.