Ukraine's National Bank net FX interventions rise 20.2% over past week
The National Bank of Ukraine (NBU) increased its foreign currency sales on the interbank market last week by $123.8 million – a 20.0% jump – reaching $742.70 million, according to official data published on the central bank's website. The NBU did not purchase any foreign currency during this period.
Recent statistics released by the regulator indicate a shift in dynamics on the cash currency market. On Monday, foreign currency sales exceeded purchases by $6.4 million. By Tuesday, the trend had reversed, with purchases outpacing sales by $6.8 million. On Thursday, the negative balance deepened to $40.6 million.
"Household activity in the cash currency market has been declining for the third consecutive month," analysts at KYT Group noted. "Average daily demand fell from $41 million in February to $17 million in April. This signals a reduction in panic-driven behavior, greater market saturation, and/or the exhaustion of consumer purchasing power amid sluggish economic growth. Another contributing factor could be the spring holiday season – a traditional time when people sell off foreign currency savings to fund celebrations or short vacations."
The official hryvnia exchange rate strengthened early in the week from UAH 41.75/$1 to UAH 41.4706/$1 but later weakened again to UAH 41.7091/$1 by the week's end.
Despite the widening negative balance, the cash market exchange rate remained largely stable. Over the weekend, the dollar even depreciated slightly – down by 5 kopiikas, with the buying rate at UAH 41.40/$1 and the selling rate at UAH 41.50/$1.
KYT Group analysts expect the exchange rate to remain within a narrow band.
"In the short term (two or four weeks), the most likely movement will be within the UAH 41.20-41.80/$1 range, with minor fluctuations of ±20-30 kopiikas. Volatility is low, and speculative demand is limited," the company said. "In the medium term (two or four months), a correction to UAH 42.00-42.50/$1 is possible if import activity picks up, inflation accelerates, or external financing weakens."
