Ukraine central bank resumes ForEx interventions

The National Bank of Ukraine (NBU) sold on Nov. 17 USD 5.3 mln on Dutch auctions at an exchange rate of up to UAH 23.7/USD, reported the Interfax-Ukraine news agency. The NBU reported via its press release that it was ready to sell up to USD 50 mln. The average exchange rate at the acution was UAH 23.67/USD, according to Interfax.

The NBU commented that there is no reason for further exchange rate volatility.  “Current accounts are balanced,” said Oleh Churii, an NBU deputy head. “Currently, we are observing falling prices for our core export items. However, this trend will be compensated at the expense of two factors.” These factors are foreign currency inflows from agricultural exports and falling prices for energy imports, the NBU web site said. As a result, current accounts will remain balanced and will not affect the hryvnia exchange rate, the web NBU expects.

Alexander Paraschiy: Falling steel and iron ore prices, delayed IMF support, as well as a possible acceleration in public funds disbursement from treasury accounts are the reasons for depreciation pressure on the hryvnia. We expect the hryvnia weakening further, with the NBU smoothing the trend with interventions.

At the same time, we agree with Churii that current accounts are balanced and there is no strong depreciation potential at the moment, which means no currency shock scenario in the near future. Against this backdrop, we see the hryvnia exchange rate in the range of UAH 24-25/USD for the remainder of the year.