In the second week of May, the currency market in Ukraine saw a gradual stabilization, manifested in occasional spikes in demand driven by events on the international stage. The official exchange rate set by the National Bank reflected the current market sentiments.
This is reported by Finway
“In the context of the currency market stabilizing and the growth of international reserves, the regulator was able to simplify a number of wartime restrictions for businesses,” noted Anna Zolotko, a board member and director of treasury operations at Unex Bank.
From May 5 to May 10, the official NBU exchange rate fluctuated as follows:
- May 5 — 41.7091 UAH/$;
- May 6 — 41.6036 UAH/$;
- May 7 — 41.4544 UAH/$;
- May 8 — 41.4388 UAH/$;
- May 9 — 41.5113 UAH/$;
- May 10 — 41.5470 UAH/$.
In the cash market, there was no significant increase in demand from the public, which was reflected in the average buying/selling rates at banks. After a decline on Monday and Tuesday, when rates dropped from 41.30/41.90 UAH/$ to 41.23/41.83 UAH/$, prices remained at a minimal level on Wednesday — 41.15/41.70 UAH/$. By the end of the week, rates stabilized at 41.20/41.80 UAH/$, indicating a small difference between the official and cash rates.
Dynamics of the Currency Market and NBU Interventions
The Ukrainian currency market (UCRM) observed a strengthening of the hryvnia. The week began with maximum values of 41.68–41.66 UAH/$, but by May 5, the rate dropped to 41.54 UAH/$, and the trend continued the following day. On May 7, the market stabilized within the range of 41.41–41.46 UAH/$, despite situational spikes in demand. On May 8, the UCRM rose to 41.56 UAH/$, but the week ended at 41.53 UAH/$.
The lowest currency supply was observed at the beginning of the week, while the highest demand growth was recorded on Wednesday and Thursday. The National Bank supported trading with its interventions, covering the structural deficit. At the same time, the regulator’s sales volumes decreased by 16% compared to the previous week, from $742.7 million to $623.35 million.
“A noticeable increase in currency demand from businesses was felt only on Wednesday and Thursday, and subsequently, after interest was saturated, it decreased,” Zolotko noted.
Prospects and Changes in Regulations
Positive market sentiments were supported by the National Bank’s report on the increase in international reserves, which rose by 10.2% to $46.7 billion as of May 1. This was made possible thanks to the Ukraine Facility instrument and the G7 Extraordinary Revenue Acceleration for Ukraine (ERA) initiative. At the same time, in April, a 17.1% decrease in net currency sales on the UCRM was recorded — the NBU sold only $2.2 billion.
Under these conditions, the regulator was able to partially liberalize restrictions for businesses, particularly regarding the repayment of external loans and financing foreign representations. However, the NBU is taking measures to combat scheme operations, including through the expansion of the monthly limit on foreign card transactions.
In the coming week, businesses may activate currency sales due to the approaching deadline for tax payments in the 20s of May, particularly in the IT sector. It is expected that such sales may contribute to the strengthening of the hryvnia, provided that usual demand volumes are maintained.