UAH plummets

UAH plummets



12 листопада 2014 года
ICU

The hryvnia plummeted 6.71% to 15.8500/USD just one day after the NBU announced an agreed upon guidance to 15-16/USD. While the market psychologically appears eager for the rate to decline even further, the UAH fundamentally seems oversold based on ICU's trade-weighted indices. As depicted in Chart 15, the hryvnia appears to be undervalued in relation to CPI and PPI. While its nominal rate could weaken even further under current economic and geopolitical conditions, such a deep devaluation is unlikely to hold because the NBU eliminated the peg to enable an equally fluid appreciation if Ukraine's economy rebounds. Historically, when the UAH's TWI depicts an extreme undervaluation of the hryvnia wherein the fundamental value hits 25-30%, these episodes are short-lived. The hryvnia's current nominal value at 16/USD indicates that it is undervalued by 18.045%. At this point, any further drop of the UAH should be temporary, with a future economic rebound resulting in a significant appreciation.

Источник: ICU

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