This week, the National Bank of Ukraine (NBU) reduced its net sales of dollars on the interbank market to $670.41 million from $722.57 million the previous week, according to the regulator. According to the data, the central bank bought $0.49 million, while selling $670.90 million.
The official hryvnia exchange rate rose by 0.2%, or 10 kopecks, over the week, in particular, on Friday it strengthened by 8 kopecks to 40.4542 UAH/$1. On the cash market, the dollar also fell by 5 kopecks to 40.82 UAH/$1.
Since the beginning of 2024, the official hryvnia exchange rate has fallen by 6.5%, or UAH 2.45, and since the National Bank switched to a managed flexibility regime on October 3, 2023, it has fallen by 10.6%, or UAH 3.89.
According to the data published by the NBU during this period, from Monday to Wednesday, the negative balance between the volume of foreign currency purchases and sales by the population widened from $42.78 million to $45.66 million.
Overall, in June, the NBU’s net interventions amounted to $2.99 billion, compared to $3.07 billion in May and $2.28 billion in April. According to preliminary estimates of the National Bank, Ukraine’s international reserves decreased by 7.9%, or $3.4 billion, to $39 billion 033.8 million last month.
At the same time, the official hryvnia exchange rate weakened by 90 kopecks in May, from 39.6370 UAH/$1 to 40.5373 UAH/$1, gradually updating its historical lows every day in the last ten days of the month and approaching the average annual exchange rate of 40.7 UAH/$1 set in the state budget for 2024. In the cash market, the hryvnia also weakened by UAH 1.24 over the month to UAH 41.05/$1. The National Bank explained this weakening by the government’s increased spending after receiving external financing in March-April, as well as the impact of the largest package of currency restrictions for businesses since the start of the full-scale war announced on May 3.
Net sale of dollars by the National Bank of Ukraine (NBU) rose from $133.7m, the lowest value in the last 11 months, to $262.6m this week, the regulator’s data show.
According to them, the sale of currency increased from $156.8 million to $263.0 million, while the purchase fell back to almost zero, although the National Bank managed to buy more than $50 million on the market in the previous two weeks after a long break.
The official hryvnia exchange rate weakened by almost 66 kop. – From 38.1410 UAH/$1 to $38.7998 UAH/$1 – the lowest level in the history of the national currency. At the same time, market participants note that the decline occurred with a relatively small volume of trading.
On the cash market, the hryvnia exchange rate followed the interbank rate, but with a smaller amplitude: a strong weakening in the first three days and relative stabilization at the end of the week. As a result, during the week it decreased by about 33 kop. – from UAH 38.53/$1 to UAH 38.86/$1. At the same time, according to the NBU, despite the weakening of the exchange rate in the first half of the week, the negative balance between the volume of foreign currency purchases and sales by the population decreased during these days: from $28.6 mln on Monday to $10.3 mln on Wednesday
At a press conference on March 14, representatives of the National Bank said that by the end of April they expect external financing in the amount of $10bn or more, which will allow to restore reserves, while before that Ukraine had received only $1.2bn since the beginning of the year.
At the same time, the NBU noted that such non-rhythmic external financing will not lead to any shocks on the currency market.
As reported, at the end of February, the NBU’s net sales fell to $1.50 billion from $2.53 billion in January, $3.55 billion in December and $2.45 billion in November.
However, in February, external support amounted to only about $0.8bn, so international reserves fell by 3.8% or $1.47bn to $37.05bn after falling by 4.9% or UAH $1.98bn in January.
The National Bank in January lowered its forecast for Ukraine’s international reserves at the end of 2024 to $40.4 billion from $44.7 billion.
Net sales of dollars by the National Bank of Ukraine (NBU) this week dropped to $530.9 million from $673.3 million a week earlier, according to data on the regulator’s website on Friday.
According to the data, in the first half of this week, for which the central bank has already published data, purchases of foreign currency by bank clients increased from $205.3 million on Monday to $239.6 million on Wednesday.
The official hryvnia exchange rate weakened by only 9 kopecks over the first two days to 37.9247 UAH/$1 on Tuesday, after which it began to strengthen: by 3 kopecks on Wednesday, and then by 19 kopecks and 18 kopecks on Thursday and Friday, respectively. As a result, the official hryvnia exchange rate at the end of the week amounted to 37.5268 UAH/$1.
According to Raiffeisen Bank’s chief dealer Serhiy Zarytsky, the maximum hryvnia appreciation recorded on Friday on the interbank market was 37.5050 UAH/$1, while the dollar peaked at 37.68 UAH/$1.
The banker noted that the trading volume on Bloomberg on Friday increased slightly compared to Thursday: $159 million versus $130 million.
“The NBU, as always, controls the situation and continues to meet the needs of buyers. At present, the NBU’s interventions do not exceed the established volumes of structural demand,” Zarytsky emphasized.
According to his personal estimates, the regulator sold an amount ranging from $120 million to $150 million at the auction.
On Friday, the reference value of the exchange rate set by the National Bank at 12:00 increased by 23 kopecks to 37.5399 UAH/$1.
Since Monday, the hryvnia has strengthened by 0.8%, or 31 kopecks, and by 1.3%, or about 48 kopecks, compared to the exchange rate at the beginning of this year. Its weakening since the National Bank switched to managed flexibility on October 3, 2023, has decreased to 2.6%, or 92 kopecks.
On the cash market on Friday, the hryvnia strengthened by 0.4% to 38.25 UAH/$1, and by 1.6% or 61 kopecks since Monday.
According to the NBU’s monthly surveys, exchange rate expectations for the next year have deteriorated slightly. In particular, in October 2023, banks expected the exchange rate to be 41.16 UAH/$1 in the next 12 months, while the updated January forecast indicates that the hryvnia is expected to devalue by 0.4% to 41.31 UAH/$1. For their part, financial analysts have revised their forecast a little more significantly: they expect the hryvnia to depreciate by 0.5% to 40.29 UAH/$1 in December 2023, compared to their previous forecast.
As reported, in December, the NBU’s net sales increased to about $3.57 billion from $2.46 billion in November, $3.34 billion in October, and $2.69 billion in September. Last month, the Ministry of Finance attracted $5 billion in external financing, which increased international reserves by 4.4% in December to $40 billion 507.9 million, the second highest level in history after July 2023.
The National Bank of Ukraine’s (NBU) net sales of dollars in the second week of September jumped to $873.1 million from $302.3 million a week earlier, the highest level this year.
According to the NBU’s website, from September 11 to 15, its purchases of foreign currency fell to a meager $0.05 million, while sales jumped from $302.7 million to $873.1 million.
On the cash market, the dollar rose by 20 kopecks over the week, approaching the level of 38.2 UAH/$1. On Monday, Finance Minister Sergii Marchenko said that the draft state budget for 2024 includes an average annual exchange rate of 41.4 UAH/$1.
As reported, in August, the volume of the National Bank’s interventions increased to $2.364 billion from $1.933 billion in July and $1.798 million in June. At the same time, the volume of external financing in August decreased to $1.664 billion, so international reserves decreased by 3.2% to $40.387 billion from a record high of $41.72 billion.
In total, since the beginning of this year, the NBU has purchased $195.9 million in the market, while selling $18 billion 21.8 million.
Net sales of dollars by the National Bank of Ukraine (NBU) in the first week of August rose to $458.3m from $349.3m in the last week of July.
According to the NBU on its website, from July 31 to August 4, 2023, its purchase of currency slightly increased from $1.1m to $2.0m, while its sale increased from $350.5m to $460.3m.
At the same time, on the cash market, the dollar, which rose in price by 45 kopecks a week earlier, lost about 20 kopecks this week and at the end of the week was quoted at a rate of about UAH 37.40/$1.
In total, since the beginning of this year, the NBU has purchased $192.4m on the market, while it sold $14bn 741.4m.
As reported, the volume of the National Bank’s interventions in July rose slightly to $1.946 bln from $1.848 bln in June and $1.93 bln in May. However, international financial support amounted to about $4.4 billion last month. As a result, international reserves, which grew by 4.5% in June to a new historic high of $39.00 billion, will exceed this record at the end of July and, according to experts, will reach $41 billion.
The U.S. dollar is getting cheaper against the euro and the pound sterling in trading on Tuesday, stable against the yen.
The ICE-calculated index, which shows the dollar’s movement against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona), is losing 0.24%; the broader WSJ Dollar Index is down 0.21%.
The euro to dollar was up 0.4% to $1.0954 as of 3 p.m., compared with $1.0909 at the close of the previous session.
The euro was supported on Tuesday by statements from European Central Bank (ECB) President Christine Lagarde, who made it clear that the regulator is unlikely to end its monetary tightening cycle anytime soon.
“It is unlikely that in the near future we will be able to state with absolute certainty that rates have peaked,” Lagarde said during an ECB forum in Sintra on Tuesday.
According to Lagarde, the effects of the 400 basis points (bps) rate hike since last July have not yet fully materialized.
“However, our work is not over yet. If the economic outlook does not change significantly, we will continue to raise rates in July,” Lagarde said in a statement posted on the ECB’s website.
The pound rose in trading to $1.2732 from $1.2714 the day before.
The dollar-yen exchange rate is 143.52 yen against 143.5 yen at Monday’s market close.
Japanese Finance Minister Shunichi Suzuki on Tuesday called the sharp weakening of the yen seen in recent weeks “one-sided and precipitous” and said the government would “take the necessary measures” in case of excessive fluctuations.
The dollar-yuan exchange rate fell during trading to 7.2099 yuan from 7.2376 yuan the day before. Investors reacted positively to the statement of Li Qiang, Premier of the State Council of China, that the authorities still expect to achieve the goal of 5% growth of Chinese GDP in the current year and are ready to take stimulating measures.
