NBU spends USD 620 mln in two days to fight panic-buying at forex

The National Bank of Ukraine (NBU) sold 270 mln of its
U.S. dollars on Mar. 10 and USD 350 mln on Mar. 11 at Ukraine’s forex to
suppress a surge in demand for foreign currency caused by the growing threat of
the global coronavirus.

Evgeniya Akhtyrko: Despite the
NBU’s large interventions, the hryvnia depreciated from UAH 24.92/USD to UAH
25.31/USD on Mar. 11 and to UAH 25.62/USD on Mar. 12, devaluing 2.7% in two
days. The NBU’s attempts to extinguish this excessive demand is an appropriate
action, but it can’t last too long as international reserves are being
depleted.

Reserves amount to USD 26.6 bln (as
of the beginning of March), remaining the only available source to deal with
Ukraine’s external payments of around USD 5 bln in 2020. With evolving turmoil
at the international markets, Ukraine’s chances for external borrowing are next
to zero.  In this situation, securing IMF financing in the nearest future
is a critical necessity.