What will happen to the dollar in the next few months? To what marks will the national currency strengthen? When can the devaluation of the hryvnia be expected?
Ilya Neskhodovskyi, the head of the analytical department of the National Interests Advocacy Network “ANTS”, commented on these questions on the broadcast of “GIT”.
“The dollar exchange rate was influenced by two factors. The first is that Ukraine now receives significant financial aid and it comes in foreign currency. In particular, our state budget deficit for this year is 38 billion dollars. Yes, of course, we have not yet agreed on the total amount of 38 billion, but we have the main agreements: 18 billion is given to us by the European Union, 10 billion by the United States of America. We are also talking about 15 billion euros, which the International Monetary Fund should give us. Thus, a significant amount of foreign currency enters Ukraine. The second factor is that we postponed our payments on the commercial debt on Eurobonds for two years. As a result, Ukraine currently has no payments in dollars, with the exception of our debt to the International Monetary Fund. We fulfill them in full and again this reduces the demand for currency,” – says Ilya Neskhodovskyi. – Yes, the condition of our economy is significantly deteriorating, the trade balance is significantly negative – more than two billion dollars, but the situation in services is a little better. Therefore, in the aggregate of these moments, as well as such temporary factors as, in particular, for example, the action of the National Bank to increase the reserve ratio, which, accordingly, increased the needs of hryvnias in banks, and this led to the fact that some banks sold part of their foreign currency savings, in order to comply with the established standard accordingly. In addition, the peasants are preparing for sowing, and this also actively affects the sale of currency.”
According to the analyst, the strengthening of the hryvnia is also influenced by the sale of personal savings by Ukrainians.
“People’s incomes have decreased, some have lost their jobs, so they are forced to sell their foreign currency savings. Therefore, in general, the strengthening of the national currency is natural at the moment. The only thing is that the fact of acceleration of such, let’s say, strengthening of the national currency, is not sufficiently substantiated. A combination of temporary factors pushed it towards strengthening.”
Neskhodovskyi predicts that the situation will stabilize in a few weeks.
“In the coming weeks, the situation will stabilize, the dollar will remain at the level of around UAH 38-39. The strengthening trend will continue until the summer and may reach the official rate, which currently stands at 36.6, and of course everything will depend on the policy of the National Bank,” he says.
The ANTS analyst emphasizes that strong strengthening of the national currency is not a favorable factor for Ukraine.
“Because in this case, our importers will receive less hryvnias, and exporters will also receive less of it. It will hit our producers.”
Ilya Neskhodovskyi emphasizes that the situation with the spread of currency will last until the summer, and then everything will depend on the harvest:
“The national currency will gradually strengthen until the summer. Do you remember that there were predictions about the dollar at 50 hryvnias. Such forecasts are absolutely groundless. If international aid had not come to us, perhaps they would have taken place. But we receive a significant amount of financial aid, so these forecasts are unrealistic, he says. – But in autumn, the situation will depend on what the harvest will be like. Why? Because we will be able to sow approximately 60%-70% of our sown areas. We cannot sow in the occupied territories, and in agricultural lands that are mined or under shelling. As a result, we will lose revenue from one of the main items of our income, which is the sale of agricultural products. Therefore, starting from autumn, we have certain risks of devaluation of the national currency”.