In Ukraine, there has been a significant increase in demand for foreign currency over the past week. The volumes of both cash and non-cash currency purchases have risen by 7-9%. This has led to a currency shortage in both the interbank and cash markets.
This is reported by Finway
Currency Exchange Rate Dynamics and National Bank Intervention
Financial analyst Andriy Shevchishin reported that against the backdrop of the euro strengthening against the dollar in the international market, the non-cash euro exchange rate in Ukraine increased from 48.2 to 48.78 UAH/euro, while the cash rate rose from 48.37 to 49.20 UAH/euro. At the same time, the National Bank of Ukraine intervened in the situation to stabilize the euro exchange rate by lowering the dollar’s value. The non-cash dollar fell from 41.83 to 41.64 UAH/$, while the cash dollar adjusted from 42.04 to 42.86 UAH/$.
Increase in Trading Volumes and Currency Interventions
Over the past week, there has been a significant increase in trading activity in the currency market. The supply of currency in the interbank market rose by 28%, reaching an average of $250 million per day, while demand increased by 13% to $350 million. Thus, the average daily currency deficit in the interbank market amounted to $100 million. The purchase of cash currency by the population also rose by 7-9%, while demand increased by 3-5%. Meanwhile, there remains a surplus of non-cash currency averaging $4.4 million per day, while the cash currency deficit reached its highest level in the last three months at $18.8 million.
The National Bank has significantly increased the volume of interventions in the currency market, bringing them to $975.1 million for the week, the highest in the last 15 weeks (+21%).
Analysts emphasize that the beginning of July is marked by the closing of the quarter and the summarizing of the first half of the year in the business environment. This traditionally affects the balance of currency supply and demand and may lead to increased volatility in the hryvnia exchange rate.
“Seasonally, July is accompanied by a slow weakening of the hryvnia, which lasts until around July 20. The start of the tax period in the last decade of the month stabilizes the market and even leads to a rollback of the dollar exchange rate due to increased currency supply. This situation may last until the end of the first week of August. However, in July, the hryvnia usually ends its weakening,” writes Shevchishin.
Experts predict that in July, the currency exchange rate may remain unstable, and the hryvnia may show a gradual weakening by the end of the month.