Nothing new except of hryvnia's depreciation

Author : Oleksandr Moyseyenko

Source : 112 Ukraine

After relative calm hryvnia again began to cede ground
18:24, 16 November 2016

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NBU said that the reason of this is "political instability", and experts believe that there are other reasons. So, what will happen to hryvnia?

November 15, exchangers took the dollar to 27 hryvnia. Buy cash dollars can be in the range 27,3- 28 USD. In the interbank hryvnia weakened substantially, the market closed at UAH 26 for a dollar. Since the beginning of the week NBU tried to calm market intervention and verbal reports about stability, but it did not help and the national currency continued to fall.

Later NBU found a new explanation - political instability.

Related: National Bank exchange rate for November 15: 25.75 hryvnias per dollar, 27.75 hryvnias per euro

Experts believe that there are fundamental factors for the weakening, because the positions of the hryvnia will be difficult to play.

In addition, Ukraine is approaching the new budget period, where the average annual hryvnia exchange rate should be 27.2 UAH per dollar, so in fact nothing unexpected happens.

What will happen to the rate in the near future.

"The situation on the interbank foreign exchange market remains stable thanks to a significant inflow of export earnings from exports of grain and oil since mid-September,"commented on the situation in markets Director of National Bank Sergei Ponomarenko.

Related: Groysman about hryvnia’s rate: These are seasonal fluctuations, there are no other risks

Then the "mantra" of favorable fundamentals in the National Bank also added a message of the political instability.

"At the interbank foreign exchange market this week continued to press political instability, despite the favorable fundamental external factors," said the deputy head of the NBU Oleg Churiy.

But not all experts are so optimistic perceive the situation as officials of the NBU. A weakening of hryvnia they see fundamental factors.

"As for the causes of the devaluation, the most important of which is the beginning of the heating season. A system of subsidies and high tariffs large energy holding company will receive substantial financial flows, some of which will focus on the currency market with a further withdrawal from the country. Such an outflow of currency cannot even override compensation on the export of grain and sunflower oil, "- says presidential adviser" Association of Ukrainian banks " Oleksiy Kusch.

Related: New hryvna banknotes to be made of flax

Economic expert discussion club Oleg Pendzyn also considers the beginning of the heating season, an important factor. He also said that Donald Trump win the elections in the US clearly will reduce US financial investment in Ukraine.

"With very high probability the next tranche of the IMF to wait a very long time. I recall that the September tranche all unanimously called politically motivated. And considering that essentially the only source of foreign reserves NBU tranches of IMF and negative foreign trade balance Ukraine YTD already exceeded half a billion dollars, the natural reaction of the market - a revaluation of the hryvnia," says Pendzyn.

In general, "revaluation factors" was made long ago, and even market players and the government itself, together with the IMF. A few months ago, VC wrote that in October-November, official hryvnia exchange rate could reach the mark of 27 UAH per dollar.

Related: What happened to 4000 hryvnias in 2015?

The average rate at 27.2 UAH per dollar in the budget 2017. That devaluation was planned at the beginning of the year were announced since the basic parameters of the budget for next year.

However, the public and businesses had every reason not to believe in a smooth devaluation and transfer funds into dollar devaluation on time this fall, as the NBU cannot flatten significant fluctuations at the "black" market.

Nobody wants to watch the devaluation of their savings, and this in turn generates additional speculative demand.

Thus, the rate of "black" market once again came to the values, which was achieved only in 2017. However, if the currency is still played their position, with the approach of the fiscal period, which incorporated new values, it will make it harder.

Related: Protesters continue to gather at the National Bank and Rada

It should also be noted that the purpose of the National Bank now is to control inflation, rather than the course. Inflation this year should not exceed + 12% -3%. Since the beginning of the year, ten months it amounted to 9.4%.

So NBU can fit into these figures and with the course of 27 UAH to the dollar to continue "to declare" stability.

"As for the devaluation of the population and business, despite the situational improvement in the last few months, this indicator continues to be in the" red "zone, and is constrained only low levels of solvency (population) and leaching of working capital (companies). The positive scenario is out in the hryvnia exchange rate corridor of 27-28 per dollar (cash market) in December 2016 and February 2017," says banking analyst.

Vitaly Shapran (Ukrainian Society of Financial Analysts) has more optimistic assessments. "27.2 in 2017 would be average. That is, if we get into 2017 with a 26.5 average to ensure that at the end of 2017, the rate should be more than 27.2," says Shapran.

Related: Deposit Guarantee Fund hopes bill on protection of defrauded bank depositors will be passed, - Head of Fund

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