Business news from Ukraine

The volume of currency purchases by the Ukrainian population in January 2023 exceeded the volume of its sales by $1 billion 103.2 million compared to $1 billion 26.2 million in December and $621.8 million in November, which was a new record since October 2012, the National Bank of Ukraine (NBU) said.

According to its website, such a result in January was once again provided by the cash currency segment, where its net purchase increased to $885.2m from $807.5m in December and $375-380m in November-October, while the balance of purchase and sale of non-cash currency remained at the level of the previous month – $218.0m.

As reported, the National Bank of Ukraine (NBU), which has held the official hryvnia exchange rate at $36.5686 UAH/$1 since the end of July 2022, has switched to a regime of managed exchange rate flexibility since October 3. Since late November, under the pressure of increased demand in the market, an obvious trend towards weakening of the national currency has been formed. Despite the increase in the National Bank’s interventions to $3.55 billion, the dollar on the interbank in December rose in price by 4.5%, or UAH 1.65 – to UAH 38.002/$1, and on the cash market due to the jump of about UAH in the last days of the year, its growth in December amounted to 5.3%, or about UAH 2 – to about $39.40 UAH/$1.

At the same time, at the end of January, the official hryvnia exchange rate strengthened to 37.5627 UAH/$1, while in the cash market – to 38.20 UAH/$1, and the spread between them narrowed again.

According to the NBU, after the exchange rate hike in late December, the first ten days of the month net purchase of currency on the non-cash market amounted to $10-30 mln, but after the exchange rate stabilized and the spread narrowed, the volume of net purchases fell significantly.

At the same time, in the cash market net purchase volumes, which averaged $40.5 mln per day in the first ten-day period of January, decreased to $34 mln in the middle of the month, but in the last ten-day period grew to $48.4 mln.

According to some market participants, a new factor in the cash market, as it already happened at the end of last year, may be the adoption of the bill on mobilization, which provides for the arrest of accounts of those who do not appear at the TCC on summons.

According to the National Bank, in general, the volume of non-cash currency sales by households in January decreased to $276.7 million from $311.7 million in December, while the volume of purchases – to $494.7 million from $530.3 million.

In the cash market in January, purchases fell to $1 billion 890.9 million from $2 billion 65.9 million, as did sales to $1 billion 5.8 million from $1 billion 258.4 million.

As reported, in total for 2022, according to official statistics, the population bought $880.1 million more currency than sold, including net purchase of cash currency amounted to $1.01 billion. For 2023, net purchase of currency by the population reached $4 billion 792.8 million, including cash – $3 billion 632.1 million.

In the non-cash foreign exchange market, the purchase of currency by bank customers in January decreased more significantly – to $5.06 billion from $7.06 billion in December, while sales – not so significantly: to $4.17 billion from $4.91 billion.

As a result, net purchases fell to $0.88 billion in January from $2.15 billion in December, back to May-June 2023 levels.

As for the volume of transactions between banks, after December’s all-time record of $5.99bn, it fell to $4.34bn in January, still significantly higher than before the exchange rate liberalization.