NBU FX interventions remain at level of about $0.5 bln for third week
Last week, the National Bank of Ukraine (NBU) reduced the sale of US dollars on the interbank market by $21.7 million, or 3.8%, to $551.3 million, which corresponds to the level of the week before last, according to statistics on the regulator's website.
According to the NBU, in the first four days of last week, the average daily negative balance of buying and selling FX currency by legal entities increased to $78.9 million from $65.6 million in the same period a week earlier and totaled $315.8 million.
On the retail foreign exchange market, the negative balance also increased to $68.2 million from $44.3 million in the week before last, although it decreased during the week from $25.7 million on Monday to $14.0 million on Thursday.
This result was partly due to the high volume of non-cash FX currency purchases on September 1 - $32.9 million.
The National Bank began to publish separately data on statistics of foreign exchange transactions for the weekend, while previously it combined them with data for Monday.
The official hryvnia to US dollar exchange rate weakened from UAH 41.3203/$1 to UAH 41.3722/$1 at the beginning of last week, but on Friday the National Bank strengthened the national currency to UAH 41.2199/$1. The last time the hryvnia was so expensive was for several days in the third decade of August, and before that, in April of this year.
On the cash market, the US dollar also fell by about 6-8 kopecks last week: buying - to UAH 41.21/$1, and selling - to about UAH 41.30/$1.
"Domestic demand remains restrained: importers are working as planned, the population is mainly oriented towards the euro, and the NBU, through its interventions, maintains equilibrium without sharp movements. The general characteristic of market behavior is a smooth decline [of the US dollar to hryvnia exchange rate] without sharp impulses," say experts from KYT Group, a large participant in the cash FX currency exchange market.
They added that the spread between buying and selling is stable in a narrow corridor of UAH 0.40–0.50, and market rates remain equidistant from the official one. This indicates the absence of nervousness and support for the "exchange rate consensus" between the market and the regulator.
According to the short-term forecast of KYT Group for the period until mid-September, the rate will remain in the basic range of UAH 41.20–41.70/$1, while the medium-term forecast for 2–3 months predicts a range of UAH 41.50–42.20/$1.
"The probable September decision of the Fed can set an impulse in either direction: in case of a rate cut, the hryvnia may strengthen in the short term, and the US dollar may drop to the lower limit; in case of its preservation, quotes will stay closer to the upper limit," experts believe.
In the long term (6+ months), they maintain a scenario of smooth devaluation: the expected benchmark is UAH 43.00–44.50/$1, provided that there is stable external assistance and a controlled policy of the NBU.