Photo from UNIAN
The National Bank of Ukraine (NBU) says that greater devaluation pressure on the hryvnia in late October and early November has stemmed from increased uncertainty pending the local elections in Ukraine and a further decline in prices of Ukraine's export-oriented staples.
Other causes behind the weakening of the hryvnia are a seasonal increase in demand for foreign currency due to the purchase of energy resources and compensations paid from the Individual Deposits Guarantee Fund, as well as stronger devaluation of the currencies of individual trading partners of Ukraine in the previous months, the NBU said in the November Macroeconomic and Monetary Review published on its website.
The NBU notes that the regulator has taken proper measures to level off the short-term surges in demand for foreign currency, while adhering to the floating exchange rate policy.
In particular, in late October and in November, the regulator was conducting currency sales auctions and performed targeted interventions to finance energy imports.
At the same time, the NBU has been actively buying foreign currency, both through interventions on the interbank forex market and at foreign exchange auctions. The total amount of currency purchased in October was $254 million, or 5.4 billion in the hryvnia equivalent.
Since the NBU's transition to a flexible rate fixing in 2014, the hryvnia has depreciated against the U.S. dollar at the official rate by 3.8 times, hitting a new historical low of UAH 30.01 to the dollar in February 2015.
After the introduction of NBU restrictions and the allocation of the first tranche under the International Monetary Fund's new cooperation program with Ukraine, the hryvnia strengthened with the exchange rate fluctuating within a range of UAH 21-23 per U.S. dollar in the past six months or so.
Recent weeks have seen the weakening of the hryvnia on the interbank forex market, which the NBU attributes to holding of the local elections in Ukraine.
On November 25, the NBU reported that the announced auctions for the purchase and sale of foreign currency on the interbank market scheduled for that day had not been held. According to the regulator, the market saw balanced currency supply and demand, achieved without NBU interventions. During the trading on that day, the hryvnia became stronger.
Yesterday, November 30, hryvnia quotations against the dollar on the interbank currency market by the close of trade settled at UAH 23.98/24.08 to the dollar. The weighted average exchange rate of the hryvnia was at UAH 23.9481 to the dollar, the NBU said.