The hryvnia exchange rate against the dollar continues to strengthen

Preliminary data on harvesting in Ukraine allow us to hope for a record yield, which will lead to the largest harvest of grain and oilseeds in history. This will contribute to the growth of foreign exchange earnings from grain sales, especially given the increase in world grain prices.

During the week, the dollar exchange rate on the interbank market sank from 27.28/27.30 UAH/. to 27.23/27.25 UAH/., but in general the market remained stable.

On Friday, against the background of excess currency supply over demand, the dollar exchange rate fell to UAH 27.15/., but it was supported by demand from Citibank customers. The National Bank did not take part in the auction last week, allowing the market to independently establish equilibrium.

In addition, since July 20, the National Bank has allowed customers to buy up to 100 thousand euros (equivalent) of foreign currency without foreign currency obligations, which will further increase the demand for foreign currency from buyers, especially against the background of a seasonal increase in offers. The NBU will regulate such operations through the mechanism of mandatory obtaining permission for such operations by banks through the e-limit. In the absence of permission, the bank will not be able to conduct such an operation, and the National Bank will be able to regulate pressure on it and customer operations during a difficult period for the hryvnia.

At the auction on July 13, the Ministry of Finance raised UAH 9.884 billion to the budget by placing the following government bonds::

• maturing on 23.06.22 at 3.7% in the amount of 65.25 million $,
• maturing on 27.10.21 at 8.5% for UAH 176.5 million,
• maturing on 20.07.22 at 10.99% by UAH 2.1 billion,
• maturing on 23.11.22 at 11.3% by UAH 1.68 billion,
• maturing on 23.08.23 at 12.09% by UAH 3.65 billion,
• maturing on 03.07.24 at 12.3% by UAH 451.2 million,
• maturing on 13.05.26 at 12.59% for UAH 37.4 million.

However, the good results of the auction did not affect the exchange rate, since buyers buy government bonds mainly for the hryvnia received from the payment of interest or repayment of bonds.