As hryvnia loses value, NBU’s managed flexibility aims to normalize foreign exchange market – Pyshnyi
Andriy Pyshnyi, Head of the Ukraine’s National Bank, linked the recent marginal depreciation of the hryvnia to seasonal influences as he discussed the exchange rate during a press briefing in Kyiv on Dec. 14.
“Now we are witnessing a familiar pre-war-time process of seasonality, when the demand for currency increases towards the end of the year,” said Pyshnyi.
Read also: Working in wartime – a discussion with National Bank of Ukraine Governor Andriy Pyshnyi
“The expenses accumulated throughout the year are being covered. Usually, they do not have time to be implemented.”
The NBU Head emphasized that this is what the NBU aimed for when transitioning to a managed flexibility exchange rate regime – a return of the foreign exchange market to a more normal mode.
“What we observe in terms of net demand for non-cash customer transactions: in October, it amounted to $97 million, in November – $61 million, and from the last tend days of November, we observed an increase,” said Yuriy Heletiy, the deputy head of the NBU.
“In December, the average indicator is $70 million. The increase in demand is due to the more active participation of the National Bank of Ukraine in the market.”
Read also: IMF establishes new aid fund for Ukraine — Pyshnyi
The NBU lowered the official exchange rate of the hryvnia by another 0.1% – to the historically minimal level of 37.0245 UAH/$1 on Dec. 13. Throughout the week, the depreciation of the exchange rate was almost 1%.
However, thanks to its strengthening to 36.0143 UAH/$1 in late November, since the NBU switched to the managed flexibility regime on Oct. 3, the weakening of the national currency was only slightly more than 1.2%, or UAH 0.45 per dollar.
On the cash market on Dec. 12, after several days of decline, the hryvnia strengthened by a few kopikas to the level of 37.65 UAH/$1. Thus, the lifting of restrictions by the NBU on Dec. 1 for banks and financial companies on the sale of cash currency to the population led to a noticeable reduction in the spread between interbank and exchange rates.
The NBU’s net sales in November decreased to $2.46 billion from $3.34 billion in October and $2.69 billion in September.
Read also: IMF board to deliberate on Ukraine’s Extended Fund Facility Program
However, the reduction in external financing to $2.04 billion led to a decrease in international reserves for the fourth consecutive month – by 0.5%, or $187.8 million, to $38,785.2 million.
We’re bringing the voice of Ukraine to the world. Support us with a one-time donation, or become a Patron!
Read the original article on The New Voice of Ukraine
