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Economy 2019-03-15T04:53:50+02:00
Ukrainian news
NBU Attributes Recent Fall Of Hryvnia To Seasonal Factors

NBU Attributes Recent Fall Of Hryvnia To Seasonal Factors

The fall of the hryvnia in recent days is due to seasonal factors.

The National Bank of Ukraine stated this in comments, the Ukrainian News Agency reports.

"A certain level of seasonality has been observed on the currency market following Ukraine's transition to a floating hryvnia exchange rate in 2015. Demand for foreign currency has risen in the first few months of the year for the third consecutive year, including demand from importers, who create stocks of goods for the new year, while the supply of foreign currency has fallen simultaneously, including supply from farmers, who usually account for about half of the supply of foreign currency on the interbank currency market during the year. Consequently, the devaluation pressure on the hryvnia increases at the beginning of each year," the National Bank of Ukraine said.

According to the National Bank of Ukraine, these seasonal factors are the key reason for the increased fluctuation of the hryvnia's exchange rate on the interbank currency market since the beginning of January this year.

"The seasonal decline in business activity, mainly in the agricultural sector, leads to a reduction in foreign-currency earnings from export of food products while there is increased demand for foreign currency from importers on the market," the National Bank of Ukraine said.

To mitigate the impact of these factors, the National Bank of Ukraine continues to maintain a presence on the interbank currency market.

The National Bank of Ukraine has sold foreign currency totaling USD 53.5 million since the beginning of this year to prevent excessive fluctuations in the exchange rate of the hryvnia.

At the same time, the National Bank of Ukraine emphasized that the effect of temporary factors at the beginning of the year could be neutralized during the remainder of the year through the beneficial influence of fundamental factors, including the external price environment for Ukrainian export goods, as was the case in 2017.

For example, Ukraine ended last year with an exchange rate that was roughly equal to the exchange rate at the beginning of the year: the hryvnia devalued by only 3% over the course of the year despite some periods of increased fluctuations.

As Ukrainian News Agency earlier reported, the hryvnia has fallen by 1.32% from 28.07 UAH/USD to 28.44 UAH/USD on the interbank currency market since the beginning of 2018.

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