Last week, the National Bank of Ukraine (NBU) reduced sales of dollars on the interbank market by $21.7 million, or 3.8%, to $551.3 million, which is the same as the week before last, according to statistics on the regulator’s website.
According to the NBU, in the first four days of last week, the average daily negative balance of buying and selling foreign currency by legal entities rose to $78.9 million from $65.6 million in the same period a week earlier and totaled $315.8 million.
The negative balance on the FX market for households also increased to $68.2 million from $44.3 million the week before, although it was declining over the course of the week, from $25.7 million on Monday to $14.0 million on Thursday.
This result was partly due to the high volume of non-cash foreign currency purchases on September 1, which amounted to $32.9 million.
The NBU started publishing weekend foreign exchange statistics separately, whereas previously it combined them with Monday data.
The official hryvnia exchange rate against the dollar weakened from 41.3203 UAH/$1 to 41.3722 UAH/$1 early last week, but on Friday the National Bank strengthened the national currency to 41.2199 UAH/$1. The last time the hryvnia was so expensive was in the third decade of August, and before that – in April of this year.
On the cash market, the dollar also fell by about 6-8 kopecks over the past week: buying to 41.21 UAH/$1, and selling to about 41.30 UAH/$1.
“Domestic demand remains restrained: importers are working as planned, the population is mainly focused on the euro, and the NBU is maintaining the balance without sharp movements. The general characteristic of market behavior is a smooth decline (of the dollar to hryvnia exchange rate) without sharp impulses,” experts of KYT Group, a major participant in the cash foreign exchange market, said.
They added that the spread between buying and selling is stable in a narrow corridor of UAH 0.40-0.50, and market rates remain equidistant from the official one. This indicates a lack of nervousness and support for the “exchange rate consensus” between the market and the regulator.
According to KYT Group’s short-term forecast for the period until mid-September, the exchange rate will remain in the basic range of UAH 41.20-41.70/$1, while the medium-term forecast for 2-3 months envisages a range of UAH 41.50-42.20/$1.
“The Fed’s likely September decision could give momentum in either direction: if the rate is cut, the hryvnia could strengthen in the short term and the dollar could fall to the lower boundary; if it is maintained, quotes will remain closer to the upper boundary,” experts say.
In the long term (6+ months), they maintain the scenario of a smooth devaluation: the expected benchmark is 43.00-44.50 UAH/$1, provided that foreign aid is stable and the NBU’s policy is controlled.
