UAH kept stable, real rate appreciates

UAH kept stable, real rate appreciates



2 липня 2015 года
ICU

The NBU repeated its support from the previous day, with bid/offer quotes at the same level of 21/23 per US dollar. The hryvnia closed flat to previous day at 21.01/USD on trading volume of US$237m. Although the bank did not disclose how much FX it bought from the market yesterday, a banking official did reveal that in June its net volume of interventions (resulting in a recovery of FX reserves) amounted to US$240m. On the back if this track record of central bank policymaking over the past few months, including two major policy preferences of FX market interventions and an accumulation of FX reserves, a pegged regime appears to have been implicitly reinstated. In our opinion, this will probably be abandoned in favor of the IMF's preferred policy that resembles managed flexibility. Our belief in this conclusion is reinforced by the fact that high inflation has already eroded the currency devaluation that occurred in 1Q15. As the hryvnia's real trade weighted value rose 0.56% over yesterday alone, 4.54% over the past month, and 7.80% since the start of 2015, such high inflation merely destroys a currency's competitive advantage over a very short time span (just four months).

Источник: ICU

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