NBU’s forex interventions down 1%, hryvnia weakens 0.5% against dollar in Nov
MOSCOW. Dec 2 (Interfax) – The National Bank of Ukraine (NBU) reduced its interventions on the interbank market by $28 million, or 1% to $2.887 billion in November, as the hryvnia’s exchange rate weakened by 22 kopecks, or 0.5% compared with 75 kopecks in October, Ukrainian media reported, citing data on the regulator’s website.
Meanwhile, the NBU increased dollar sales on the interbank market by $315.5 million, or 48.1% week-on-week to $963.3 million in the last week of November, as the weakening of the hryvnia’s exchange rate slowed to 3.7 kopecks from 9 kopecks the week before.
In the first four days of last week, the average daily negative balance of currency purchases and sales by legal entities increased to $529.2 million from $202.8 million for the same period the week before, amounting to $286.2 million on November 27, Thanksgiving Day, as U.S. banks were closed on the following day.
At the same time, the cash market’s negative balance grew slightly, standing at $147.9 million from Saturday to Thursday versus $129.6 million the week before last. Sales of non-cash forex were larger than its purchases for all of these days.
The official hryvnia-dollar exchange rate, which began last week at UAH 42.2672/$1, weakened to an all-time high of UAH 42.4015/$1 in the space of two days, but ended the week at the level of UAH 42.1928/$1.
On the cash market, the dollar exchange rate did not change seriously over the past week either. The buy rate was around UAH 42.11/$1, and the sell rate around UAH 42.45/$1 on November 27.
According to experts from KYT Group, a major cash currency exchange market participant, the spread between the buy and sell rates at bank cash desks did not grow any further in November, but, on the contrary, there was a tendency for the spread to narrow. It was UAH 0.45-0.6/$1 at large retail banks at the end of November.
Key factors impacting the international market included expectations ahead of the December meeting of the Federal Reserve, which is widely expected to cut the key rate by 25 basis points, while the dollar is supported by positive signals from the White House regarding U.S.-China trade terms.
A positive factor on the domestic market in November was the staff-level agreement reached with the International Monetary Fund regarding a new four-year Extended Fund Facility arrangement, under which the NBU commits to reducing inflation to its 5% target over a three-year policy horizon, while allowing greater exchange rate flexibility, KYT Group analysts said.
They expect the exchange rate to stay within UAH 42.12-UAH 42.55/$1 within the next week or two, likely gravitating toward the upper limit of the forecast, while in the medium term (2-3 months) it will be within UAH 42.2-UAH 42.9/$1.
