Hryvnia rate keeps hitting new lows

Photo: Konstantin Melnitsky

On Friday hryvnia once again hit a new low. The National Bank of Ukraine weakened the official hryvnia rate against US dollar by 81.93 kopecks compared with the previous day to UAH 25.92/USD. The quotations in the final part of the trading today reached UAH 26.2-26.5/USD, according to the players of the interbank currency exchange.

«This is an influence of fulfillment of the bids registered in the beginning of the week. Delayed demand for currency amounted to US $1 bn,» says Chair of the Board of the Ukrainian Interbank Currency Exchange Anatoliy Hulei.

Former CEO of Ukrgazbank Serhiy Mamedov noted that hryvnia rate fell most already after lunch. «In the first half of the day the rate was UAH 25-25.2/USD, while after lunch dollar rate increased to UAH 26/USD, as several large banks with large volumes of purchase appeared on the exchange,» said Mamedov. Also statements of some politicians that despite Minsk agreements «Ukraine needs war» partially influenced the exchange rate, believes former member of the NBU Council Vasyl Horbal.

Failed kickback

On Thursday the regulator strengthened hryvnia by 45.89 kopecks to UAH 25.09/UDS. Experts believes that this sudden strengthening of the national currency was primarily due to the news on the agreements reached between Ukraine and International Monetary Fund on allocation of new loans. «Hryvnia has recently been quite sensitive to such news. That is why two news influenced the rate yesterday: IMF and signing of peace agreements in Minsk,» claims director of IBI-Rating Hryhoriy Pererva.

At that, financial analysts note that the volumes of interbank currency market are still insignificant for formation of the real rate of the national currency. «On a volatile market that Ukraine has right now, it will be possible to speak about strengthening/devaluation of hryvnia only after the rate overcomes some landmarks and fixes on them,» says Director for Economic Analysis and Strategic Planning at VTB Bank Mykhailo Papanov.

Yesterday the volume of purchase of foreign currency on the interbank exchange was US $322.8 mn, and the day before it was even less at US $287 mn. Even the cancellation of 0.5% tax on the purchase of currency on the interbank exchange did not stimulate the exchange. «The volume of trading on the interbank currency exchange is lower than last year. The drawback of the interbank exchange is that it is possible to influence the rate through operative injection in the market of even an insignificant volume of currency,» confirms Pererva.

Be that as it may, there is a certain progress. The official dollar rate is approaching its cost on the black market. «The official rate currently corresponds to that on the market; the difference between them is minimal, which, certainly, is not good for the black market,» believes Papanov.

Today, currency profiteers purchase hard currency at the average rate of UAH 24.8/USD and sell it for UAH 25.2/USD. «However, there is no significant flow from one market onto the other, which is confirmed by practically unchanging volumes of trading on the interbank exchange,» added Pererva.

Thankless job

Taking into account hryvnia’s sensitivity to different external factors, including those that have nothing to do with the economy, experts are quite unwilling in trying to predict the exchange rate even for the nearest future. «It is difficult to forecast anything in terms of hryvnia rate, because the existing interbank exchange resembles a pocket market, where all players are part of conspiracy,» complains Asset Manager at Nettrader Investment Company Yuriy Bazhynov.

Military actions in the east of the country prevent objective assessment of hryvnia, believes Pererva. He believes that hryvnia may strengthen only in case peace in the Donbas is observed and in case the gold and currency reserves of the NBU begin to increase.

However, the IMF funds, a part of which could be used to support the NBU reserves, will not come soon. «The people’s deputies are off to a break. This is not important for them. It means that the funds will come not earlier than March 8. We will be strengthening the rate using information messages,» complains Horbal.

Chief of Currency and Financial Markets Operations Department of OTP Bank Maksym Davlad believes that next week the rate will range within UAH 25.5-26.50/UAH with a possible deviation of 2-3%. In the longer term and under favorable conditions hryvnia can even strengthen to UAH 18-19/USD, believes partner of asset management company Ovamo Capital Oleksiy Karasev.