In July, the National Bank of Ukraine (NBU) increased its sales of foreign currency on the interbank market by $873.6 million, or 30.9%, to $3.69 billion, according to statistics on the regulator’s website.
According to the statistics, the National Bank’s purchases of foreign currency in July fell to $0.83 million from $1.2 million in June, and last week the NBU’s foreign exchange interventions decreased by $171.9 million, or 21.2%, to $639.6 million compared to the previous week.
In July, the official hryvnia to dollar exchange rate strengthened from 41.7788 UAH/$1 to 41.7662 UAH/$1.
In the cash market, the hryvnia exchange rate strengthened by almost 13 kopecks over the month: buying at around 41.48 UAH/$1, selling at 41.58 UAH/$1.
“In July, the dollar to hryvnia exchange rate continued to demonstrate high stability with insignificant intraday volatility that did not turn into trend movements,” said experts from KYT Group, a major participant in the cash foreign exchange market.
They point out that the exchange rate fluctuations do not exceed 0.2%, which indicates an extremely restrained market reaction – especially given the announcement of important macroeconomic signals.
In their opinion, in the short term (one to three weeks), the corridor of 41.40-42.10 UAH/$ will remain in place in the absence of external shocks or surges in demand from importers.
KYT Group analysts expect that in the medium term (up to three months) the exchange rate may gradually shift to 42.30-42.80 UAH/$ in the face of the traditional growth in budget expenditures in the second half of the year, increased imports, or the implementation of the expected September Fed rate cut, which will lead to a correction of the dollar.
In the long term (over six months), experts predict a controlled devaluation trend. According to the baseline scenario, the exchange rate is expected to be in the range of UAH 43.00-44.50/$, provided that the current level of international support, stable reserves, and no unexpected shocks, especially those of a non-economic nature, are maintained.
The hryvnia exchange rate, when plans to introduce a state of emergency were announced, fell below the level of UAH 29.5/$1 on the interbank market on Wednesday afternoon.
As one of the market participants told Interfax-Ukraine, in the first half of the day, thanks to the efforts of the National Bank, it was kept at the level of UAH 29.3-29.35/$1 compared to UAH 29.05/$1 at the end of the day on Tuesday, however, some transactions have now appeared much cheaper than UAH 29.5/$1.
The weakening of the hryvnia is also taking place in the cash market, where since the beginning of the day the bid quotes have risen from about UAH 29/$1 to UAH 29.2/$1, while the selling rate has risen from UAH 29.3/$1 to UAH 29.7/$1.
In the cash market among individuals, according to the finance.ua resource, the hryvnia exchange rate has already fallen to UAH 30/$1.
As reported, last week, after two weeks of net redemption of foreign currency, the NBU again returned to its net sale to support the hryvnia: the sale amounted to $503 million, the purchase – $50 million, although since the beginning of the year the National Bank has sold $2.064 billion and bought – $0.657 billion.
However, another aggravation on the part of Russia and its recognition of the so-called “L/DPR” with the next territorial claims this week led to the weakening of the hryvnia by almost 4%, and the need for the National Bank to again enter the market with interventions to support the hryvnia. Its additional interventions are estimated at over $400 million.
QUOTES OF INTERBANK CURRENCY MARKET OF UKRAINE (UAH FOR $1, IN 01.06.2021-30.06.2021)
QUOTES OF INTERBANK CURRENCY MARKET OF UKRAINE (UAH FOR €1, IN 01.04.2021-30.04.2021)
QUOTES OF INTERBANK CURRENCY MARKET OF UKRAINE (UAH FOR $1, IN 01.04.2021-30.04.2021)
Quotes of interbank currency market of Ukraine (UAH for €1, IN 01.04.2021-30.04.2021)
