NBU explains excessive demand for foreign currency

Today, January 17, the supply of currency is limited primarily due to the coincidence of the day off in honor of Martin Luther King in the U.S. and a working day in Ukraine on January 16, 2017, Churiy noted.

Accordingly, yesterday's lack of forex proceeds to be transferred to Ukrainian banks affected today's compulsory sale of foreign exchange earnings, he said.

At the same time, such factors as seasonal decline in business activity and the hryvnia liquidity growth at exporting companies that received a $16 billion VAT refund in December remain relevant, he added.

Read alsoSaving hryvnia: NBU to sell $100 mln in auction Jan 17"Given the effect of certain factors, the National Bank continues to maintain its presence in the interbank foreign exchange market. Since the beginning of this year, the NBU has sold a total of $108.8 million," Churiy said.

He recalled that the regulator expanded its toolkit to include new instruments to address excessive rate volatility. Among other things, the NBU last week intervened in the forex market by selling $10 million, with a request for the best quotation, which has proved its efficiency.

As UNIAN reported earlier, the NBU on January 17 announced an auction to sell the currency of $100 million to support the hryvnia exchange rate.

The national currency has continued to depreciate since mid-December 2016. January 16, the hryvnia quotations against the U.S. dollar on the interbank currency market by the middle of trades settled at UAH 27.7/27.8 to the dollar, while the cash market rates were close to UAH 30 /USD.

The NBU explained the increased volatility of the exchange rate of the hryvnia in the interbank foreign exchange market by decline in currency supply due to the seasonal downturn, traditional for the first months of the year.

Hryvnia’s historic low against the U.S. dollar was at UAH 30.01 /USD in February 2015.