Former National Bank Council Chairman Bohdan Danylyshyn believes that continuing the currency liberalization policy in the face of a structural currency deficit leads to additional hyped demand for foreign currency, which, in turn, causes the devaluation of the hryvnia and a further surge in inflation.
He wrote about this on Facebook, the Ukrainian News agency reports.
"Now the increased foreign exchange demand has to be met at the cost of significant interventions by the NBU, which are washing out the country's foreign exchange reserves, which undermines the long-term macro-financial stability of the state. Next year, the IMF expects that the NBU's net interventions will amount to 36.0 billion (+5%), which should ensure the maintenance of the average annual exchange rate at the level of UAH 43.4 per USD 1 (+8%). Given the unbalanced currency expectations, the "planned" funds may not be enough," Danylyshyn wrote.
According to him, currency liberalization is an obvious failure of the NBU's policy, which still requires awareness and rethinking by both the domestic expert community, the IMF and other international partners.
The former chairman of the NBU Council added that in 20 days of January, the NBU conducted net foreign exchange interventions worth USD 2.5 billion.
"Every week, more than USD 1 billion is spent from the country's foreign exchange reserves to support the hryvnia. In 2024, the NBU spent USD 34.8 billion on supporting the hryvnia (+22% compared to 2023). The devaluation of the hryvnia in annual terms is 11.4% (January to January). However, neither significant foreign exchange interventions by the NBU nor the devaluation of the hryvnia stop foreign exchange demand," he emphasized.
The main part of the hype demand for foreign exchange is formed by the population.
Over 20 days of January, the population bought over USD 930 million in cash and non-cash foreign exchange (net), which is 39% of all NBU interventions.
In 2024, currency purchases by the population accounted for 35% of the NBU's foreign exchange interventions, in 2023 – 17%, and in 2022 – only 4%.
In 2024, the population increased the purchase of foreign currency 3 times compared to 2023.
As the Ukrainian News agency earlier reported, in 2024, the NBU bought USD 126.28 million on the interbank market and sold USD 35,312.64 million.
In 2023, the NBU bought USD 219.85 million on the interbank market and sold USD 28,829.73 million.
The NBU did not buy or sell euros in 2023.
In 2022, the National Bank bought USD 3,267.95 million and EUR 110.97 million on the interbank market, and sold USD 26,380.59 million and EUR 1,789.11 million.
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