Ukraine central bank head says 11.5-11.9 UAH/USD is balanced level

The sudden 11 percent plunge of the Ukrainian hryvnia’s value starting Aug. 11 was triggered by the war in the Donbas region and public pessimism, without any backing fundamental factors, National Bank of Ukraine (NBU) Head Valeriia Gontareva told parliament on Aug. 12. The balanced exchange rate is at the level of 11.5-11.9 UAH/USD, she said, while there is no economic basis for the current 13-13.5 UAH/USD rate. “It is only due to panic sentiments,” Gontareva said.



The NBU will stabilize the hryvnia in the nearest future and anticipates to reach its target using market instruments, she said. If market tools don’t work, the NBU will leverage administrative tools, which are being discussed with the IMF. In particular, the level of compulsory foreign currency revenue sales could be increased to 100% from 50% currently, she said.



During the last seven days, the NBU has intervened three times at the ForEx market, spending USD 150 mln to prop up the hryvnia. “We have additional capacities to support the hryvnia without touching the limit on reserves committed to the IMF,” she mentioned. Gontareva said she can’t state clearly when the hryvnia will be finally stabilized, citing the ongoing uncertainty surrounding the armed fighting. She rejected MPs claims that banks were getting extra refunding, which was assumed to be among the reasons for hryvnia destabilization.



Alexander Paraschiy: Remarks from the NBU head were badly needed amid the current panic on the market. Our view on the fundamental reasons for the hryvnia’s weakening is totally in line with what Gontareva said. Still, it is not clear how the NBU will be acting to calm the market. Nevertheless, in light of the tension that followed the hryvnia plunge, we anticipate the NBU will start acting more decisively already in the next few days. It’s very likely the situation will be totally stabilized as soon as the IMF wires more funds to Ukraine at the start of September.

Источник: Конкорд Капитал