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Nayman recommends Ukrainians keep savings in the U.S. dollar.
Managing partner at the Capital Times investment company Erik Nayman says Ukraine's national currency, the hryvnia, has started weakening towards UAH 30-32 per U.S. dollar; therefore, there will be forex fluctuations this autumn.
The expert advises Ukrainians to be patient and save U.S. dollars, which "are now the best means of savings," the Ukrainian news outlet Glavred reported on August 14.
Read alsoNBU explains causes behind hryvnia's seasonal weakening
To forecast the hryvnia's forex rate this autumn, one needs to analyze what exactly may happen in the near future, he said.
"Firstly, there will be presidential elections in the spring of 2019, which may be followed by parliamentary ones. Secondly, winter is ahead (keep our fingers crossed so that it will be warm); therefore, the issue of gas and coal imports will be raised. To this end, Naftogaz will be entering the market and buying currency," the expert said.
In addition, the importers are expected to purchase goods for New Year holidays, which also means billions of dollars and demand for currency.
"The fourth point is that there will be a peak of foreign debt repayments in 2019. But the IMF has suspended disbursements [to Ukraine]. Fifthly, there is practically no money in the State Treasury of Ukraine: the balance is a little more than UAH 2 billion [US$73 million], and this is practically next to nothing. The reason is a strong hryvnia exchange rate, which led to shortfalls of budget receipts. Customs revenue has fallen, whereas costs are still high," Nayman added.
On the one hand, the NBU realizes that there is inflationary and devaluation pressure on the hryvnia, and the rate of UAH 30 per dollar would be optimal. But the decline in the national currency rate will inevitably unleash inflation. Therefore, the regulator will hold back the devaluation by raising the key policy rate from 17.5% to 20-22% per annum. On the other hand, the finance ministry has no funds to pay social benefits and other costs, the expert said.
According to Nayman, only money remittances by 7-8 million Ukrainian labor migrants may counterbalance these five points.
"This [labor migration] is currently Ukraine's main export commodity. With these resources, about $9 billion a year, we cover a gap in the balance of trade that has developed in the past year," the expert stressed.
So, Ukraine enters this autumn against such a backdrop, and the country's macroeconomic management needs improvements, as there are too many situational interests, namely the 2019 elections, Nayman summed up.