Ukraine central bank abstains from ForEx interventions

The National Bank of Ukraine abstained from foreign currency interventions in June, though it purchased USD 101.2 mln in gold to replenish gross reserves, according to NBU data released on July 9. What’s more, individual cash purchases in June were negative (-USD 67.8 mln), indicating low interest in foreign currency in the population through the month.

Alexander Paraschiy: The situation on the ForEx market remains tranquil. Despite gross reserves having started to decline, Ukrainians haven’t yet reacted to the bad news so far. Yet the situation does not look sustainable. Individuals’ demand has always strengthened in September and we have no reason to anticipate a different scenario this fall. We expect cash demand to reach USD 4.2 bln in 2013, which is half of 2012. By the end of May, cash demand was USD 842 mln so the lion’s share of the demand should come in the autumn months, which poses elevated risks for the national currency.