Exchange rate fluctuations: Why dollar decreases in price in Ukraine?

Author : Taras Kozak

Source : 112 Ukraine

Atypical situation for Ukraine: US dollar rate on exchange market is not growing
22:37, 18 December 2019

Open source

This time an ordinary Ukrainian looks at his bunch of dollars and barely holds back tears. After all, the purchasing power of this sum fell by at least 15%! And inflation is not to blame – its rate is only 5.1% per year.

Who is to blame this time for the troubles of an ordinary Ukrainian? One would like to habitually blame Gontareva, but she has been abroad for a year and a half. Poroshenko? He screams a lot from the TV, but is also out of business. The new power team of Zelensky? They also do not interfere in the National Bank policy, the IMF does not allow this.

People say that there are some government bonds that foreigners are hunting for. But this is probably a lie! Who needs Ukrainian debts?! Oh, apparently, the masons are to blame, as well as Soros and Putin!

What is really going on?

Billions of dollars pour in a torrential stream in Ukraine. The National Bank of Ukraine is barely holding back this pressure. In the last 2 weeks, the NBU bought more than $ 860 million on the interbank market! Gold and currency vaults and basements of the National Bank are already bursting from the volume of foreign currency. And besides the main bank of the country, no one can buy so many dollars.

Related: London court obliges Kolomoysky and Bogolyubov to pay 14 million dollars to PrivatBank

It is easy to imagine what would happen if the National Bank did not intervene. The dollar would have been below the mark of 20 hryvnia per dollar.

And big privatization has not yet begun, which is promised to be honest, with the admission of non-residents. And what about the agricultural land market? If foreigners come with their tens of billions of dollars, then in Ukraine dollars will be too cheap.

What’s next?

Forecasting the hryvnia – dollar rate today is more difficult than ever. In the foreign exchange market, there are many factors that can push the course in different directions.

In favor of strengthening the hryvnia play:

- labor migrants who transfer to Ukraine more and more currency annually;

- foreign portfolio investors, who are satisfied with the high yield of hryvnia government bonds;

- annually growing grain crops, most of which are exported;

- a strong Naftogaz team, which has already won in courts $ 5 billion for gas from Gazprom and can still win 11 billion hryvnias for transit, and also does not allow oligarchs to profit from gas;

- international organizations that support Ukraine and Zelensky team, and believe in our reforms.

In favor of strengthening the dollar play:

- Igor Kolomoisky, who does not want to return the billions of dollars withdrawn from PrivatBank;

- Gazprom, because it does not want to transport its gas through Ukraine. As a result of the suspension of transit, Ukraine will annually lose 2-3 billion dollars of foreign exchange earnings;

- a potential global economic crisis (which is being postponed so far), because the dollar always grows with instability in the world;

- Ukrainian exporters, because they have less hryvnias for dollars received from exports and it is  not enough to cover all expenses.

There are a number of situational factors, which can affect the course in one direction or another. It is impossible to predict them all.

So if someone says that he knows what will happen to the hryvnia / dollar rate, do not believe him. Either he lies, or just does not understand the situation.

Related: Zelensky’s visit to Japan cost Ukraine almost 80 thousand dollars

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