Expert explains situation in foreign exchange market

Analyst at Univer Investment Group Mykhailo Fedorov has said the tactics of the National Bank of Ukraine (NBU) to smooth out excessive fluctuations in the foreign exchange market by selling foreign currency from reserves is correct.

"Last year, the NBU replenished its reserves by US$7.9 billion to support the exchange rate. Now the reverse process is taking place. This is the practice of almost all central banks – the amplitude of fluctuations is smoothed out in this way," the expert said.

According to Fedorov, the hryvnia devaluation would be deeper and more rapid without NBU interventions, and the loss of business and citizens due to such devaluation would be more significant.

Read alsoExperts give outlook for hryvnia rate

The analyst believes the stabilization of the foreign exchange market and budget financing will facilitate the use of the remaining currency at Naftogaz from a win in arbitration with Russian Gazprom for the purchase of Ukrainian domestic government loan bonds.

"Dividends are a long story, and domestic government loan bonds could be bought even tomorrow, while interest would be returned later," the expert said.

As UNIAN reported earlier, the National Bank of Ukraine on March 18 set the official forex rate for Thursday, March 19, at UAH 27.27 to the U.S. dollar, which let the country's national currency weaken by 21 kopiykas.

The U.S. dollar has remained at the same level against the hryvnia, Ukraine's national currency, for the second day and is sold for UAH 28.50 in Kyiv's currency exchange booths.

On March 12, the NBU said it expects to replenish reserves from the currency received by Naftogaz of Ukraine by decision of the Stockholm arbitration, most of which has not yet been sold.