Will the dollar exceed 44 hryvnias?
Next week, the situation in Ukraine’s currency market is expected to be stable and predictable. Despite demand for currency remaining 10-15% higher than supply, the National Bank fully controls the market through currency interventions.
Should we expect significant changes in the currency market in the week following Easter? In a comment to RBC-Ukraine, the director of the financial markets and investment activities department of “Globus Bank,” Taras Lesovoy, shared his insights.
Also read: Will the fuel cashback be canceled from May? The Ministry of Economy explained what will happen with the payments.
Main points:
- Overall situation: Next week, the market will remain stable; demand in the interbank market will exceed supply by 10-15%, but the NBU will adjust the exchange rate through interventions.
- No spikes: The economy has adapted to fuel prices, the initial reaction period has ended, and seasonal demand for currency in spring is traditionally lower.
- Cash market: There is no currency shortage in banks and exchange offices, and the difference between cash and interbank rates will be only 10-15 kopecks.
- Deposits: The NBU’s decision on April 30 may increase the yield on hryvnia deposits by 0.5-1 percentage points as early as May.
- External influence: Due to instability in the Middle East, the dollar may strengthen globally, which for Ukraine would mean a stable dollar but possibly a depreciation of the euro by 0.85-0.90 UAH.
- Forecast for April 13-19: The dollar will hover around 44 UAH, and the euro around 51 UAH. Cash corridors will be 43.5-44.5 UAH/dollar and 50.5-52 UAH/euro.
- Exchange rate changes: Daily fluctuations will be minimal – from 10 to 30 kopecks depending on the institution.
Lesovoy notes that the situation in Ukraine’s currency market is likely to remain quite similar to what has been observed previously over the next week.
“In the interbank market, demand will continue to exceed supply; however, this gap is not expected to go beyond acceptable limits: demand is expected to be higher than supply within 10-15%. Under these conditions, the National Bank will continue to play a decisive role, closely monitoring market conditions and adjusting the rate through interventions,” he explains.
Why sharp fluctuations are not expected?
According to Lesovoy, the economy has already adapted to the new prices following the rise in fuel costs. Since the initial reaction period has ended, there are no substantial grounds for new waves of exchange rate fluctuations at this time.
Moreover, demand for currency in spring is traditionally lower, and there is no cash shortage in banks and exchange offices.
Deposits will become more attractive
The expert added that a decision from the NBU is expected on April 30, which may increase the yield on hryvnia deposits by 0.5-1 percentage points. This will allow depositors not only to offset inflation but also to earn a small passive income in May.
Impact of events in the Middle East
Global instability remains the main external factor. If the situation around Iran escalates, the dollar may strengthen globally as a “safe haven asset.” For Ukraine, this would mean a stable dollar due to the NBU’s policy, while the euro could significantly depreciate (theoretically by 0.85-0.90 UAH).
Forecast for April 13-19
- Exchange rate forecast: the dollar will remain around 44 UAH, and the euro around 51 UAH.
- Cash “corridors”: dollar – 43.5-44.5 UAH and euro – 50.5-52 UAH.
- Daily changes: will be minimal – up to 10-20 kopecks in banks and up to 30 kopecks in exchange offices.
- Difference between rates: the average difference between interbank and cash rates will be only 10-15 kopecks, indicating a lack of panic.
- International market: the basic ratio of dollar/euro is expected to be within 1.14-1.16.
What will be the differences between buying and selling (spread)?
- In banks: up to 0.5-0.6 UAH on the dollar and up to 0.8-1 UAH on the euro.
- In exchange offices: up to 0.6-1 UAH on the dollar and up to 1-1.3 UAH on the euro.
Also read: A 7 hryvnia gap per liter: why prices at gas stations vary and when fuel will start to decrease.
