: :inin Kyiv (EET)

Central Bank assures forex market under full control

The current situation in the currency market is under control, while the volatility of the hryvnia exchange rate has not gone beyond reasonable limits and is in line with inflation targets set by the National Bank of Ukraine (NBU).

”The situation is fully under control. The existing volatility does not go beyond limits,” Director of the NBU monetary policy and economic analysis department Serhiy Nikolaichuk told Hormadske TV.

”The dynamics of the exchange rate are in line with our goals for inflation, set at 12% this year and 8% next year. We have the ability to control the process,” he added.

He said that devaluation pressures on the hryvnia last month was the result, on the one hand, of a seasonal increase in demand for foreign currency, and on the other, of a decrease in grain prices on world markets and the tense situation around occupied Crimea and Donbas.

Interventions by the NBU in recent days were aimed at reducing volatility in the market, he added.

The official noted that fluctuations within the range of up to 20% are normal.

”As a rule, fluctuations in the medium term, at 10-15-20%, are considered to be normal. Much depends on what the fundamental conditions are,” he said.

”Even developed countries, such as Australia and Canada, and others, countries with a stable trend towards inflation targeting, a well-established monetary policy, and anchor-type inflation expectations, saw significant devaluation of their currencies against the U.S. dollar during the year – up to 25-30% when there was a cycle of a decline in prices of commodities in the past few years,” he said.

According to Nikolaichuk, the dynamics of the exchange rate in Ukraine before the end of the year will depend on what the fundamental factors will be.

The situation will also reflect how prices of export-oriented staples will be changing and how successful are the reforms and how precise is the draft budget, which is now being discussed.

”To say at what level it will be – 20, 30 [hryvnias per U.S. dollar is impossible] …The NBU traditionally does not announce any landmarks [for the exchange rate] to avoid false signals,” he explained.

He also said that further cooperation with the International Monetary Fund, is, perhaps, not decisive for forecasting the exchange rate, but the program with the IMF gives a clear signal to investors and economic agents.

”What is more, it is an important psychological factor for the population, with respect to the success of the reforms and the stability of the fundamental factors that shape the dynamics of the exchange rate in the long-term outlook,” he added.

As reported by UNIAN earlier, the volatility of the hryvnia exchange rate in August rose moderately after strengthening for five months.

The hryvnia exchange rate to the U.S. dollar had depreciated by 2.6% as of August 29, compared with the beginning of the month.

Experts predict fluctuations of the hryvnia exchange rate and admit it is weakening to UAH 27 per U.S. dollar, in connection with payments on external debt and the purchase of natural gas amid unclear prospects for further cooperation with the IMF.

The historically weak hryvnia was recorded in February 2015, when the rate was UAH 30.01 per U.S. dollar.


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