NBU spends almost US$500 mln to support hryvnia

The National Bank of Ukraine (NBU) in July 2020 bought US$130 million on the interbank foreign exchange market, and sold US$498.7 million to smooth out excessive fluctuations.

For comparison, in June, the NBU only bought foreign currency (totaling US$1.115 billion), according to the NBU's data on forex interventions.

The regulator sold most currency on July 20-24, namely US$347.8 million.

On July 13-17, the NBU did not carry out interventions on the interbank market for the first time since September 2018.

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Since year-start, the National Bank bought US$4.015 billion in foreign currency reserves, and sold US$3.292 billion.

Background

• In the autumn of 2019, the Economy Ministry published a macroeconomic forecast for 2020-2022, in which the average exchange rate for 2020 was assumed at UAH 27 per dollar.

• On March 29, 2020, the Cabinet of Ministers approved an updated macroeconomic forecast, which provides for the average annual exchange rate in 2020 to be at UAH 29.5 per dollar.

• The updated macroeconomic forecast provided for a fall in GDP by 3.9% in 2020, an increase in inflation from 5.6 to 8.7%; an average monthly salary of UAH 11,000 (US$397), which, taking into account inflation, would not actually change compared to 2019; unemployment at 9.4%, which is 1.3% more than in the previous forecast.

• On July 29, 2020, in an updated macroeconomic forecast for the next three years, the Economy Ministry predicted an increase in GDP by 4.6% in 2021, by 4.3 in 2022, and by 4.7% in 2023.

• In the draft "Forecast of economic and social development of Ukraine for 2021-2023," the ministry laid down the exchange rate at UAH 29.1 per dollar for 2021, as well as UAH 28.8 at the end of the year.