NBU's net currency interventions increase by 30.9% in July

In July, the National Bank of Ukraine (NBU) increased the sale of currency on the interbank market by $873.6 million, or by 30.9% – to $3.69 billion, according to statistics on the regulator’s website.

According to it, the purchase of currency by the National Bank in July fell to $830,000 from $1.2 million in June, and last week, the NBU’s currency interventions decreased by $171.9 million compared to the previous week, or by 21.2% – to $639.6 million.

The official hryvnia to US dollar exchange rate in July strengthened from UAH 41.7788/$1 to UAH 41.7662/$1.

On the cash market, the hryvnia exchange rate strengthened by almost 13 kopecks over the month: purchase – about UAH 41.48/$1, sale – UAH 41.58/$1.

"In July, the dollar exchange rate against the hryvnia continued to demonstrate high stability with insignificant intraday volatility, which does not turn into trend movements," say experts from a large participant in the cash currency exchange market, KYT Group.

They note that exchange rate fluctuations do not exceed 0.2%, which indicates an extremely restrained market reaction - especially given the announcement of important macroeconomic signals.

In their opinion, in the short term (one to three weeks), the corridor of UAH 41.40–42.10/$ will remain in the absence of external shocks or surges in demand from importers.

KYT Group analysts expect that in the medium term (up to three months) the exchange rate may gradually shift to UAH 42.30–42.80/$1 under the conditions of the traditional growth of budget expenditures for the second half of the year, increased imports or the implementation of the expected September reduction of the federal funds rate, which will lead to a correction of the dollar.

In the long term (over six months), experts predict a controlled devaluation trend. According to the baseline scenario, the exchange rate is expected to be within UAH 43–44.5/$1, provided that the current level of international support, stable reserves and the absence of unexpected shocks, primarily of an extra-economic nature, are maintained.