Interbank hryvnia strengthened to a three-year high

Hryvnia strengthened against the dollar to a three-year high due to attraction of foreign investments.

Last week, the hryvnia has strengthened by 2% to 24.3 UAH/$ first of all, the resulting increase in supply of foreign currency from non-residents who continue to buy government bonds. Today Ministry of Finance will last in this quarter, the auction on placement of t-bills.

the national currency is also supported by long-term factors: a steady stream of foreign exchange earnings from migrant workers and revenues of farmers from the export of the new harvest. It should be noted that the daily volume of interbank trading remained marginal, in the range of 300-350 million dollars. This indicates a significant dependence of the rate of foreign exchange earnings.

the national Bank keeps the hryvnia from a sharp strengthening and increase of currency on the interbank market. If from 27 to 30 August, he bought $ 20 million, with 2 to 6 September 114.5 m $, and from 9 to 13 September 198 million $. Since the beginning of the year the national Bank purchased on the interbank market of 3.8 billion $ and sold 0.25 billion $. Thus, the positive balance of interventions of the national Bank amounted to 3.55 billion $.

Highest rate of hryvnia bonds at 16% per annum and the strengthening of the exchange rate by 8-10% since the beginning of the year enabled the non-residents earn 24-25% annual in foreign currency on the background of negative income securities of European countries, so foreign speculative capital will continue to invest in Ukrainian bonds at a high yield.

According to the draft budget for next year, the volume of borrowings loan funds are planned at UAH 380 billion, most of which the budget will receive through the sale of government bonds in national currency. Surprised that active demand for government bonds with a yield of 15-16%, the Ministry of Finance does not reduce the rate to 7-8%, which would reduce the debt burden on the budget.

the following year, the budgeted rate of 28.2 UAH/$, and the owners of domestic companies, the calculations take into account the rate of 28 UAH/$. This suggests that no one is counting on growth in the absence of real reform, and filling of the economy speculative capital has short-term effects and can dramatically change the currency in the case of withdrawal.