Hryvnia weakening is temporary

By on October 24, 2014
National-Bank-of-Ukraine

There are no macroeconomic grounds for the large exchange rate fluctuations, and the present pressure on the hryvnia is linked to the reaction of economic agents to the war conflict in the eastern part of Ukraine, the National Bank of Ukraine (NBU) has said.

“This is a temporary phenomenon, as the external position of the country over the past several months has considerably improved,” the NBU said, citing its governor Valeriya Gontareva.

The NBU said that the deficit of the current account, the most stable part of the balance of payment, fell to $1.9 billion in H1, 2014 compared to $5.4 billion a year ago. In addition, the country receives large financing from official sources.

“This month we expect that $500 million will be sent by the World Bank and $1.45 billion by the IMF. In June inflow of foreign direct investment has resumed,” reads the report.

The central bank said that on Monday the bank used the mechanism of currency interventions to smooth the extra fluctuations of the hryvnia exchange rate on the market, entering the market with quotations 12.61/12.70/$1.

“The NBU does not plan to stop the flexible exchange rate formation policy,” Gontareva said.

Source: Interfax

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