The hryvnia has fallen again: the National Bank of Ukraine talks about risks for the foreign exchange market

The National Bank of Ukraine has expressed its concern over the escalating situation on the foreign exchange market. Despite this, it allowed the interbank dollar rate to rise: if yesterday’s trades ended at 41.47 UAH/USD, today, July 18, it closed at 41.65 UAH/USD.

From the opening, the market surpassed the new psychological level of 41.50 UAH/USD – trading on the Bloomberg platform (the main one) started at 41.515 UAH/USD. However, quotations quickly retreated to 41.40 UAH/USD and even to 41.38 UAH/USD, giving hope for a rollback. But this was short-lived. After lunch, the market went up again: first to 41.45 UAH/USD and then to 41.53 UAH/USD. The final surge happened in the last 10 minutes of trading, involving a small sale amount ($8 million), when the rate increased by 12 kopecks, ending the day at 41.65 UAH/USD.

The National Bank, which regularly states that it controls the situation on the foreign exchange market, did not attempt to curb this new wave of devaluation and allowed the hryvnia to settle at the new level.

However, when setting its official rate for tomorrow, July 19, the NBU decided not to account for the final price increase and even slightly reduced the value of two currencies:

• The official dollar rate decreased from 41.4627 UAH/USD to 41.4220 UAH/USD.
• The official euro rate dropped from 45.3457 UAH/EUR to 45.2618 UAH/EUR.

In public statements, the NBU expressed its concern over the current situation on the foreign exchange market, acknowledging that it could “create additional risks for the stability of the foreign exchange market.” Therefore, the regulator promised to take appropriate measures to ensure the resilience of the hryvnia to maintain price stability. Bank treasurers do not understand why these measures were not taken today.

“NBU dealers simply needed to control today’s trades until the end of the day and sell the last $10 million at the average daily rate. Then the market would have stayed around 41.50 UAH/USD, and there wouldn’t have been a surge. However, for some reason, they decided to remain silent and let the quotes go,” said the director of the treasury of a large bank.

As we have previously mentioned, the NBU’s behavior has its own explanation: the more the national currency devalues, the more hryvnia the budget will receive from the sale of financial aid coming from Western partners.

The National Bank explained the hryvnia’s devaluation to the media by an increase in foreign currency demand due to rising budget expenditures, a significant part of which is converted into foreign currency. Additionally, currency rules have been liberalized, and there has been a decrease in foreign currency sales from the agricultural sector.

Amid all this, the cash dollar exchange rate is actively rising. In bank cash desks, the selling rate has already reached a maximum of 42.10 UAH/USD, set by five banks: TAScombank, Accordbank, First Investment Bank, MetaBank, and “Clearing House” bank. The average selling price was 41.86 UAH/USD, while the buying price was 41.60 UAH/USD.

The card exchange rate for sales reached 42.50 UAH/USD today, set by Accordbank. The state-owned Sense Bank’s rate was 42.05 UAH/USD. The average card selling rate reached 41.76 UAH/USD, and the buying rate was 41.17 UAH/USD.