The weakening of the hryvnia, observed at the end of last year and in early January, is due to seasonal factors, increased demand for currency and a delay in financial assistance from the West. This was stated by Deputy Head of the National Bank Sergei Nikolaychuk, quoted by the regulator's press service.
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Nikolaichuk said that the demand for currency has increased as a result record budget expenditures in December and, traditionally, at the end of the year, demand for currency from the population increases.
“Also, the foreign exchange market was put under pressure by psychological factors associated with the delay in the provision of international assistance, while at the same time active hostilities continue and this creates a need for financing,” added the deputy head of the National Bank.
At the same time, he emphasized that under a regime of managed flexibility, a change in course in one direction or another is normal.
“As the NBU promised, the rate can either weaken when the situation on the market worsens or change when the situation improves (as was the case, for example, in October and the first half of November),” Nikolaychuk noted.
Nikolaichuk added that the National Bank is gradually increasing the amplitude of exchange rate fluctuations.
“Accordingly, now fluctuations in the interbank market are somewhat greater than, for example, in October. At the same time, thanks to the existing preconditions, they are not threatening. Also, exchange rate fluctuations remain significantly less than before the full-scale war,” said the deputy head of the National Bank.
He recalled that the exchange rate on the cash market, which is important for the population, has been fluctuating in both directions for a long time and, despite a certain weakening of the hryvnia at the end of the year, it remains stronger than, for example, in the fourth quarter of 2022.
Nikolaichuk also emphasized that the National Bank is not even considering the possibility of returning to the fixed exchange rate of the hryvnia, but will continue to smooth excessive fluctuations in the foreign exchange market.
We would like to remind you that in recent weeks the hryvnia exchange rate has fallen from 36.01 UAH/$ at the end of November to 38.0412 UAH/$5 January.