Ukrainians were net sellers of foreign currency in March

The individual foreign currency supply in Ukraine exceeded individual demand by USD 129 mln in March 2015, according to the NBU report of Apr. 8. It is the second month in row that Ukrainians have sold more hard currency than they bought. In February, the net individual supply was USD 126 mln. General foreign currency interventions by Ukraine’s central bank (the NBU) were also reported positive in March. The NBU purchased USD 209 mln more than it sold throughout the month.

Alexander Paraschiy: Over the last month, the hryvnia exchange rate has been hovering in the range of UAH 21-24 per USD (vs. the range of UAH 17 to 33 per USD in February), thus demonstrating some signs of stabilization. That enabled to decrease speculative retail demand for foreign currency.

At the same time, in our view, the tendency with household supply of foreign currency is not healthy. A net supply of individual foreign cash might mean that Ukrainians are spending their savings (usually being stored in hard currency) as a consequence of a decline in their real incomes. 

As regards to positive NBU’s ForEx interventions, it was a natural consequence of the central bank’s cutting off a large segement of importers from ForEx market with administrative restrictions.

Against the backdrop of IFI’s support arriving in the country, we do not expect any significant volatility in the UAH/USD exchange rate in the coming months. That support includes USD 4.87 bln from the IMF received in March, EUR 250 mln from the EU in April, and USD 1 bln in U.S.-guaranteed Eurobonds expected by the end of May.