Experts predict weaker hryvnia this summer

Analysts are almost unanimous in assessing the dollar rate against the hryvnia at UAH 27-28 per U.S. dollar by late September.

REUTERS

REUTERS

Experts predict Ukraine's hryvnia will weaken this summer amid the coronavirus-related pandemic.

"When making the calculations, the experts took into account the updated macroeconomic forecast by the Cabinet of Ministers for 2020 and proceeded from the fact that quarantine may be canceled after July 31 this year and it will remain adaptive," as reported by the Segodnya newspaper.

Head of the Council of Entrepreneurs under the Cabinet of Ministers Andriy Zablovskiy, Head of the Analytic Content Group at Forex Club Andriy Shevchyshyn, member of the Economic Discussion Club Oleh Pendzin and Vice President for Economic Policy at the Ukrainian League of Industrialists and Entrepreneurs Viktor Skarshevsky presented their own version of the development of events.

Read alsoExpert predicts stable hryvnia in summer

Analysts are almost unanimous in assessing the dollar rate against the hryvnia at UAH 27-28 per U.S. dollar by late September.

"I maintain the devaluation expectations as for the hryvnia, projecting that its forex rate will reach UAH 28 to the dollar," Shevchyshyn said. "The quarantine led to a drop in imports and demand for foreign currency from small- and medium-sized businesses. And the population was in no hurry to buy it over the loss of income. The trading turnover of the foreign exchange market has decreased significantly, which stabilized the exchange rate at a low level. But as soon as importers more actively enter the foreign exchange market, the forex rate will go up."

Skarshevsky has listed factors, which in the third quarter will influence the forex rate determined by supply and demand.

These factors will remain the same as in the second quarter:

• Demand that fell due to a reduction in imports and their cheapening (primarily energy);

• Supply that shrank due to a decline in exports, as well as a reduction in foreign exchange earnings from labor migrants by 13.2%;

• Non-residents continue withdrawing the currency from Ukraine through exit from hryvnia-denominated government bonds, but it is proceeding slowly;

• There are enough gold and currency reserves of the National Bank of Ukraine, therefore payments on foreign debt will have a minimal effect on the dynamics of the exchange rate; and

• A low public demand for foreign currency due to lower incomes remains.

"These trends will remain in the third quarter, so the forex rate will be in the range of UAH 26.5-27.5 to the dollar," Skarshevsky said.

As UNIAN reported earlier, Director of Expert Assessments Institute Viacheslav Butko said the official forex rate of the hryvnia would remain stable in summer thanks to financial assistance from the International Monetary Fund and the European Union.

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