You're reading: Hryvnia in November unlikely to hit Hr 15 per US dollar

The forex rate of the hryvnia against the US dollar is unlikely to hit Hr 15 per U.S. dollar amid the new forex policy of the National Bank of Ukraine (NBU), which provides minimum intervention support to the forex market.

“Hr 15 per US dollar is the bottom the hryvnia won’t go through. Otherwise, the country’s economy won’t stand it,” First Deputy Board Chairman of Prominvestbank Viacheslav Yutkin said.

Among the key factors that can let the hryvnia forex rate keep afloat are the arrival of new tranches of the International Monetary Fund’s loan, the end to hostilities in eastern Ukraine, the launch of economic reforms, as well as the formation of a constitutional majority in the new parliament, Yutkin said. Yet, the hryvnia will be under the pressure of such developments as attempts to expand the boundaries of the self-proclaimed republics, a delay in the economic reforms, bank depositors’ panic due to the devaluation of the national currency and the outflow of foreign capital due to the sharp deterioration of the investment climate in the country and the lack of real prospects for improvement in the near future.

Deputy Chairman and head of the treasury of Agrocombank Serhiy Sokolovsky says that the hryvnia in November will stay within Hr 13.50- 15.00 per US dollar.

“The situation in November is most likely to remain unchanged compared to October, thus the forex rate will fluctuate between Hr 13.50-15.00 per US dollar and Hr 17.00-9.00 per euro,” he said.

The banker named the key factors that will contribute to the stabilization of the forex market: the narrowing of the deficit of Ukraine’s balance of payments and a gradual improvement in the economic and political situation in the country.

VTB Bank (Ukraine) Director of economic analysis and strategic planning Mykhailo Papanov believes that the hryvnia in November will be wobbling within Hr 13.5-14.2 per US dollar. Short-term fluctuations up to Hr 14.5 per US dollar are possible. “We hope that the announced abandonment by the NBU of the fixed exchange rate regime will help establish a balanced forex market for the hryvnia, which will partially bring suspended foreign exchange offers back onto the market, will let meet the pent-up demand for the currency and reduce the shadow cash forex market,” he said.

At the same time, Maksym Davlad, the head of the forex and financial operations department at OTP Bank, doesn’t rule out the possibility of the further weakening of the hryvnia in the short-term outlook.

“I expect that the [forex rate] may hit Hr 15.00 per US dollar, but most likely it will be followed by adjustments to Hr 14.50-14.80 per US dollar. Importers will buy less, exporters will regard this as an achievement of the local price cap and will bring in their revenues, which will let the market get balanced within Hr 14.50-14.80 per US dollar,” he said.

Ukrsotsbank expert Tantely Ratovohery believes that the stabilization of the hryvnia’s exchange rate can be achieved in the case of the consolidated operations of the entire system of the state power.

“The national currency still has a chance to resist the collapse, especially in case of the consolidated operations of the entire system of the state power. The stabilization of the powers will calm down both the population and the business and investment environment. And it will partially ease the pressure on the hryvnia, despite the general negative economic environment,” he said.

Ukrainian companies’ boosting exports onto the European market due to the implementation of the EU-Ukraine Association Agreement, as well as the planned fulfillment of agreements with international financial and donor organizations will be conducive to the strengthening of the hryvnia.

“I don’t rule out that the government will be even able to attract investment in the country through eurobonds,” he added.