The Ukrainian currency market is projected to remain stable in the final week of February, with the dollar trading within a range of 43 to 43.75 UAH and the euro reaching up to 52 UAH. This stability comes as businesses are actively accumulating foreign currency reserves for energy imports due to adverse weather conditions and ongoing missile attacks on infrastructure.
Key Insights:
- Currency Ranges: By March 1, the cash market is expected to see the dollar between 43-43.75 UAH and the euro between 50-52 UAH.
- Demand Drivers: Increased demand for currency is driven by businesses forming reserves amid cold weather and infrastructure threats.
- Reserves Status: The National Bank of Ukraine (NBU) holds over 57 billion USD in international reserves, enabling it to effectively manage speculative demand and prevent market chaos.
- Controlled Flexibility: Despite fluctuations, the market remains within controlled parameters, with no significant exchange rate distortions anticipated.
As February concludes, experts note that this period is traditionally a transitional phase for the currency market. Factors influencing the exchange rate include the ongoing war, energy risks, domestic economic challenges, and unstable external conditions.
Reasons for Increased Currency Demand:
Experts highlight that demand has remained elevated in recent weeks, despite the supply from agricultural producers and tax contributions to the budget.
- Energy Imports: Unusual activity from importers is noted due to the cold weather and missile strikes on infrastructure.
- Reserves Formation: Businesses are compelled to build currency reserves in anticipation of potential electricity supply disruptions.
- Macroeconomic Indicators: The NBU has revised its forecasts, expecting inflation at 7.5% and GDP growth at 1.8%.
The NBU continues to implement a managed flexibility regime, intervening when market equilibrium is disrupted to inject liquidity as needed.
With over 57 billion USD in reserves, the NBU is positioned to conduct targeted interventions, alleviating excess demand and reducing speculative pressure.
Market Forecast (February 23 – March 1):
As February draws to a close, the market is expected to remain tense yet controlled, with no sharp exchange rate distortions predicted.
Currency Ranges:
- Cash Market: 43-43.75 UAH/USD and 50-52 UAH/EUR.
- Interbank Market: 43-43.5 UAH/USD and 50-52 UAH/EUR.
Exchange Rate Indicators:
- Daily Changes: Up to 0.3 UAH in exchange offices and 0.1-0.2 UAH in commercial banks.
- Purchase-Sale Difference: Up to 0.5-0.6 UAH per dollar and 0.8-1 UAH per euro in bank cash desks.
- Average Deviations: Within 1-1.5% from the week’s starting rate.
With prudent actions from the NBU, the currency dynamics are expected to remain logical and predictable, avoiding chaotic volatility.
The Ukrainian currency market is set for a stable week, with the dollar and euro expected to trade within defined ranges. Increased demand for foreign currency is driven by businesses preparing for energy imports amid ongoing challenges, while the National Bank of Ukraine maintains significant reserves to manage market fluctuations.