According to forecasts by Taras Lesovoy, head of the treasury department at Globus Bank, the state of the Ukrainian currency market in mid-March remains stable and no significant exchange rate fluctuations are expected. The banker told about this in a commentary to RBC-Ukraine.
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Factors of stability of the currency market
Lesnoy identified several key factors that contribute to stability:
- NBU: The change in the key rate is aimed at containing inflation and maintaining the stability of the national currency. In addition, the National Bank carries out currency interventions to regulate the balance of supply and demand in the market. International financial assistance: The international financial assistance expected this year almost completely covers the state budget deficit (about $38.8 billion), which reduces the risk of hryvnia devaluation. Cooperation with international financial institutions creates an additional margin of safety to maintain macroeconomic stability. Export earnings: The export of agricultural products and other strategic goods ensures the inflow of currency into the country, which contributes to the formation of international currency reserves. Convergence of cash and non-cash rates: In recent weeks, the difference between the rates on the cash and non-cash markets has been minimal. This indicates the formation of a single market rate. “Managed flexibility” from the NBU: The National Bank's strategy does not provide for sharp exchange rate jumps, which makes the rate more predictable and stable.
Forecast of exchange rates for the next week
According to the banker, the following key characteristics of the currency market are expected next week:
- Interbank: 41.4−42.2 UAH/USD and 43.5−45 UAH/EUR. Cash market: 41.4−42 UAH/USD and 43.5−45 UAH/EUR. Average difference between interbank and cash market rates: 0 UAH. Average weekly fluctuations: within 1−1.5% of the initial rate of the week.
Results: controlled situation and short-term fluctuations
“Although military factors and foreign policy changes remain key, the overall situation on the currency market is under control. The market is still sufficiently protected from serious shocks, and any possible changes will be short-term and situational,” Lesovoy concluded.
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