The regulator expects no significant demand for foreign currency.
Photo from UNIAN
After the quarantine is lifted, the demand for foreign currency will gradually recover, while the Ukrainian hryvnia will fluctuate in both directions depending on supply and demand on the interbank market, said Dmytro Solohub, Deputy Governor of the National Bank.
"I don't think everyone will wake up one day and rush to buy foreign currency simultaneously. The economy will recover gradually, and so will demand, accordingly. But weakening will also affect exports. Therefore, the rate will fluctuate in both directions, depending on supply and demand on the interbank market," Solohub said, according to liga.net.
Tracing the activity of exporters and importers in the foreign exchange market during a pandemic, it is obvious that the main industries have been quite pro-active in selling foreign currency in recent months, including both agricultural companies and industrial players like machine builders.
"For example, Ukraine took advantage of the moment and increased the supply of sunflower oil, as some of our competitors imposed restrictions on the export of sunflower seeds. These companies were one of the main sellers of foreign currency. As for demand, for example, travel companies haven't bought foreign currency since March, whereas in March-May 2019 they bought $200 million," Solohub said.
The deputy head of the National Bank also explained why the dollar began to strengthen in the second half of May for the first time in 1.5 months.
"We've been having a floating rate for five years now. It's a normal situation where it rises first, then falls, then rises again – and falls again. This is market. There's no point in focusing on this," he said.
Solohub also named the reasons for the hryvnia revaluation in April and May.
"There were different factors. For example, seasonal ones. Always, May 20 has been the date of Q1 income tax payment so companies would sell foreign currency for settlements. There's also quarantine, certainly. We analyzed the market data from March to the first half of May, and it was clearly seen that many bought foreign currency in the wake of the March hype. Then they had to sell it," Solohub said.
As UNIAN reported earlier, on May 21, International Monetary Fund officials, headed by Ivana Vladkova-Hollar, held remote discussions with the Ukrainian authorities before reaching a staff-level agreement on a new 18-month stand-by program worth nearly $5 billion to tackle the effects of the COVID-19 pandemic.
The National Bank of Ukraine predicts receipt of the first IMF tranche worth $2 billion in the second quarter of 2020.
On Thursday, May 28, the National Bank of Ukraine set the official hryvnia exchange rate against the U.S. dollar at UAH 27.00, that is, the hryvnia has been sliding against the dollar for the third day in a row – this time by 10 kopiykas.