Ukraine ForEx interventions halved yoy in 2013
17 January 2014
The National Bank of Ukraine (NBU) spent USD 3.2 bln on interventions on the foreign exchange, which is 2.4x less than a year ago (USD 7.5 bln), the NBU reported on Jan. 16. December interventions were the largest (USD 942 mln) and 2.2x higher yoy.
Alexander Paraschiy: Individual demand for foreign cash in 2013 appeared to be much lower than it used to be. Indeed, Ukrainians have been living under the threat of potential currency decline for three years now. Yet hryvnia volatility has been very minor so far due to rash efforts of the authorities, who have spent more than 40% of the state’s gross reserves since 2011. No major changes in the exchange rate was the main reason for Ukrainians losing interest in foreign currencies in 2013. What’s more, due to poor economic growth and permanent delays with wages in the public sector, Ukrainians were short of money to create sufficient demand for foreign currency.
For 2014, we anticipate individual demand for foreign cash to increase in view of political tension and the approaching presidential elections. These two factors spurred foreign currency purchases in the past. Still demand will still be far below 2012 levels due to limited economic growth and, subsequently, little earnings growth. We expect NBU interventions to be at USD 4.5 bln in 2014.
