NBU's FX interventions up by almost 1.5 times over week, but by 20% less than last year's

Last week, the National Bank of Ukraine (NBU) increased its sales of U.S. dollars on the interbank market by $208.7 million (47.1%), reaching $651.5 million. The last time sales were at such a high level was at the end of July, according to statistics on the regulator's website.

According to the NBU, the average daily negative balance of FX currency buying and selling by legal entities increased from $39.4 million for the same period a week earlier to $49.6 million in the first four days of last week, totaling $198.6 million.

On the retail foreign exchange market, on the contrary, the negative balance decreased to $43.7 million from $67.1 million the week before last, and all days the sale of non-cash currency exceeded its purchase.

The official exchange rate of the hryvnia to the U.S. dollar, which started last week at UAH 41.2838/$1, strengthened to UAH 41.1752/$1 in two days, but by the end of the week it decreased to UAH 41.2502/$1, and already at the beginning of this one – to UAH 41.3811/$1.

On the cash market, the U.S. dollar exchange rate over the past week varied along the trajectory of the official one, so in general it practically did not change during the week: buying – about UAH 41.23/$1, and selling – about UAH 41.30/$1.

"September has seen smooth U.S. dollar fluctuations with an almost flat downward trend. On global markets, the U.S. dollar has already priced in most of the expectations regarding the Federal Reserve System's rate reduction in September. On the evening of September 17, the Fed lowered the rate by 25 basis points to 4-4.25% per annum, and this was reflected in the domestic Ukrainian market," experts of a large participant in the cash currency exchange market, KYT Group, note.

They recalled that, over the past month, the cash market rate had gradually slid down without sharp impulses. The average buying level decreased from UAH 41.20 to UAH 41.05/1$, and the selling level decreased from UAH 41.65 to UAH 41.50/1$. Meanwhile, the official NBU rate moved in sync with the market one, decreasing from UAH 41.35 to UAH 41.25/1$. This maintained the "anchoring" of the market.

"The spreads between buying and selling are kept in a narrow corridor of UAH 0.40–0.50, and market rates remain equidistant from the official one, which indicates the presence of an exchange rate consensus between the market and the regulator," the KYT Group believes.

The company added that the population does not create a rush demand for the U.S. dollar, focusing on the euro, which is more elastic in exchange rate formation. This reduces risks for the U.S. dollar cash segment and minimizes pressure on the market.

According to experts, by the end of September the basic rate range is UAH 41.00–41.50/1$ with a tendency to the lower limit of the forecast due to a rate decrease, while the medium-term forecast, for 2–3 months, is UAH 41.30–42.00/$1.

"Long-term [6+ months]: the scenario of smooth devaluation of the hryvnia persists. With stable external revenues, the expected benchmark is UAH 43.00–44.50/$1 by mid-2026, provided that the broad context of the current situation remains unchanged," the KYT Group says.