Ukrainians are selling off foreign currency, NBU official says

In April, residents of Ukraine sold nearly 7x more foreign currency cash than they bought, the UNIAN news agency reported, citing Vladyslav Rashkovan, the deputy head of the National Bank of Ukraine (NBU). “Every day, the population buys USD 1.5-5 mln throughout the banking system but sells nearly USD 11-12 mln,” he said. Businesses have also increased the supply of foreign currency on the market by bringing more foreign currency revenue to Ukraine, Rashkovan said. He mentioned the improved macroeconomic situation, strengthened external accounts and improved public sentiment among the factors contributing to the trend.

The NBU has also observed growth in hryvnia deposits in the banking system, he said. “I believe that we have the fundamentals for the hryvnia to stop depreciating,” Rashkovan said. “The situation offers some ground for cautious optimism at the ForEx and for the banking system in general.”

Alexander Paraschiy: Indeed over the last month, the situation at the ForEx has stabilized and the hryvnia has even strengthened from UAH 23.5/USD at the start of April to UAH 20.6/USD by May 14. The main factors are improved external accounts, the relative calm on the war front, cooperation with the IMF and reduced volumes of hryvnia printing due to success in budget collections. Over the summer months, we see good chances for the hryvnia to remain relatively flat, fluctuating in the range of UAH 20-25/USD.

At the same time, 2H15 might bring many surprises with subsequent impact on the ForEx. Firstly, we have concerns on the performance of fiscal accounts since the current budget surplus is seen to a large extent as a result of devaluation. In other words, falling consumption will eat up a large part of inflationary revenue growth, which might prompt authorities to return to hryvnia printing. Secondly, the 2015 budget envisaged solid quasi-fiscal financing at the expense of state bond sales to the NBU, which also contain risks for national currency. And finally, any escalation in Russian aggression will hurt the hryvnia. So far, we project the hryvnia exchange rate at UAH 25/USD by the end of the year.

Источник: Конкорд Капитал