The hryvnia exchange rate could appreciate after the announcement of final presidential election returns thanks to an inflow of foreign investment and return of Ukrainian capital to the country, according to Ukrainian bankers.
"If court disputes [don’t last] a long period of time, one can expect the start of the return to the market of currency from the shadow economy and abroad. An additional source could be sale of currency by foreign investors to buy government domestic loan bonds. Taking into account the fact that offer could be worth dozens of billions, there is a likelihood that the national currency will strengthen like an avalanche," said the deputy board chairman of Premium Bank, Andriy Ponomarev.
The banker said that the exchange rate reinforcement could quickly reach UAH 7.50-7.70/$1 and even lower without the interference from the National Bank of Ukraine (NBU).
The first deputy board chairman of Prominvestbank, Vyacheslav Yutkin, agreed.
"After February 17, when the official results of the election are to be announced, one can expect the hryvnia strengthening, as risks linked to the political uncertainty will disappear and the country’s investment attractiveness will at least not worsen," he said.
Yutkin said that the economic programs of the presidential candidates are known to the public and do not bring serious threats of the destabilization of the financial market. The banker said that the NBU still has control of the situation on the currency market.
Ponomarev said that taking into account a small gap between Viktor Yanukovych and Yulia Tymoshenko, it is likely that the losing party will not accept with the election outcome and try to challenge the result in the courts.
He said that the likelihood of a repeat of the demonstrations of rallies in the type seen during the Orange Revolution was very small: before the inauguration of the new president, the hryvnia exchange rate would not stray from the UAH 8.0-8.15/$1 range.
"The further fate of the hryvnia exchange rate depends on the value of purchases of extra currency supply by the NBU," he said.
The banker said that apart from supporting the interests of exporters and importers, the new leadership of the NBU will tightly cooperate with the Finance Ministry, taking into account the need to cover the budget deficit, current wage debt payments, payments of increased social standards, service state bond debts and reimburse VAT.
Head of the banking department at the Banking University of the NBU Rostyslav Slaviuk said that the completion of the election campaign will lead to the redistribution of control spheres and exchange rate policy will depend on the said changes.
"Financial and industrial groups will not miss the chance to put their own person in the NBU’s leadership. The interests of exporting and importing firms will be lobbied for, which will require a balancing act between two extremes from the NBU leadership, which in turn will impact the exchange rate and the situation on the financial market," he said.
