Ukraine currency stabilizes after 5% devaluation since August

Hryvnia has been steadily depreciating since the end
of August up until Oct. 4, and it stabilized at UAH 26.74/USD as of Oct. 6.
Since Aug. 21, Ukraine’s national currency has lost 4.9%. Since early
September, the National Bank of Ukraine has spent USD 220 mln on ForEx
interventions defending hryvnia from a deeper drop. 

Alexander Paraschiy: Hryvnia
weakening from September was exactly what we expected. A widening trade deficit
and individual sentiments are the reasons for the U-turn. Provisional customs
statistics report a USD 906 mln trade deficit in September vs. USD 657 mln a
year ago. The depreciation tendency is seen to continue through the upcoming
month with budget spending fueling the trend on top of other factors. As of
Oct. 1, the state treasury had accumulated UAH 60.0 bln of public funds (near
2.2% of GDP) and the major part of those funds will be injected into the
economy in 2017 on top of regular budget spending. This factor promises extra
depreciation pressure through November-December. Against this backdrop we are
keeping our projection on hryvnia at UAH 28.0 – 28.5 per USD by year end.