Ukrainians’ foreign currency purchases exceed sales in July

Individual demand for foreign cash exceeded sales in July for the first time since March, as households purchased USD 208 mln more in cash than sold, the National Bank of Ukraine (NBU) reported on Aug. 8. For 7M14, net individual demand for foreign cash was USD 1.5 bln, which is 12x more than a year ago (USD 126 mln).

Alexander Paraschiy: Resumed individual demand for foreign currency is a bad news for the hryvnia’s prospects in the nearest future. Since March, Ukrainians had little interest in foreign currency but now we see that such stability was indeed quite fragile. We do not know for sure what prompted Ukrainians to rush for U.S. dollars and euros but the prime minister’s resignation threat is our main suspect at the moment. Given the hryvnia’s plunge in August, we think active individual purchases have been further spurred by the hryvnia’s resumed volatility.