Hryvnia becomes unstable due to upcoming holidays

“This trend became possible thanks to the allocated assistance from Ukraine’s partner countries. The NBU’s foreign exchange interventions in November at the level of $2.45 billion reduced the country’s international reserves to $36.5 billion,” explains Oryshchak.

Second. As for the inflation statistics in Ukraine, there was a real surprise here. The consumer price index (CPI) was expected to end the disinflationary trend in November, but it continued. CPI in annual terms is 5.1% versus 5.3% in October.

“This gives the NBU the opportunity for another bold reduction in the interest rate,” says Oryshchak.

What awaits the hryvnia exchange rate in the week from December 11 to 17

As Taras Lesovoy, head of the treasury department at GLOBUS BANK, tells Delo.ua, there should be no global exchange rate changes next week. In particular, it is likely that the fluctuation corridor will be:

• on the interbank market - within 36.4-37 UAH/$ and 39-40 UAH/€,
• on the cash market – 36.8-37.5 UAH/$ and 39-41 UAH/€.

“The only difference from last week’s situation may be a “seasonal” increase in supply on the cash market, as actually happens every year on the eve of major holidays,” explains the banker.

That is, according to Lesovoy, currency trends will depend on the following factors:

• The interbank market will operate under a “managed flexibility” regime, providing for free exchange rate formation, but with periodic regulation by the NBU of the level of demand and supply, measured by the volume of foreign exchange interventions.
• When setting rates, the cash market will be guided primarily by interbank exchange rate indicators.
• The abolition of currency restrictions on the cash market has actually united the rates of banks and exchange offices, increasing competition, which will have a positive effect on the rate.
• It is expected that changes in rates will be frequent and varied, but their amplitude will not go beyond the exchange rate corridors, that is, we should not expect any rapid ups or downs.
• On the eve of the holidays, it is expected that supply on the cash market may increase by 10-15%, which will also affect current rates.
• The difference between non-cash and cash rates will remain minimal, one might even say “penny”: at the level of 0.2-0.3 UAH.
• The difference between the buying and selling rates on the interbank market will not exceed 0.1 UAH, and on the cash market – 0.2 UAH. Current fluctuations will be within UAH 0.2 on the interbank market and UAH 0.3 on the cash market.

What events will affect the hryvnia in the week from December 11 to 17

This week there will be even more internal events, notes Maxim Oryshchak. In particular:

• On Monday, December 11, Ukraine's GDP data for the third quarter will be released. The growth rate of the Ukrainian economy could slow down from 19.5% to 11% y/y. This is bad for the hryvnia.
• On Wednesday, December 13, attention will be focused on the results of the NBU meeting. The regulator will most likely reduce the interest rate from 16 to 14-15%. In addition, signals about future rate actions are interesting.
• On Friday, December 15, data on Ukrainian foreign trade for October will be released. It is expected that the trade deficit could increase from $2.73 billion to $2.80 billion. This is bad for the hryvnia.

In addition to internal ones, investors will also monitor external events, notes Oryshchak. Among them:

• On Tuesday, December 12, the US will present November inflation statistics. The consumer price index (CPI) in annual terms should decrease from 3.2% to 3.1%. This is a reason for weakness for the US dollar.
• On Wednesday, December 13, the results of the Fed meeting will be published. The discount rate should remain at 5.50%, probability 97%.

“But markets are more interested in comments about the meeting in March. The probability of the first reduction at the March meeting is estimated at 55%. If the head of the Fed signals that this assessment is correct, the US dollar will decline,” explains the expert.

As a result, in the week from December 11 to 17, the national and American currencies may receive a number of negative news: “But for the hryvnia, such factors will be blocked by NBU interventions, but not for the US dollar. This means that the hryvnia should be stronger than the US dollar, but weaker for the euro, where there will be no such negativity,” says Maxim Oryshchak.

In his opinion, the official NBU rate could be as follows:

• for the US dollar – it will remain about 36.40-36.60 UAH/$,
• for the euro – will increase to 39.80 UAH/€.

And in the cash market there should be such dynamics:

• in the country's banks, the average value of the American currency may move to the lower limit of the range of 37.20-37.60 UAH/$.
• the average cost of the euro may remain in the range of 40.50–40.90 UAH/€.

What will happen to the hryvnia exchange rate until the end of December?

Banker Taras Lesovoy says that the further situation on the market over the course of two weeks will depend on a number of factors:

• The volumes of future macro-financial support for Ukraine for 2024, in particular, the expected decision on providing assistance from the United States.
• The export situation: solving the problem of blocking the border by Polish carriers.
• The situation at the front and countering hostile shelling of critical infrastructure.
• Plans and tactics of the regulator in the interbank market. We are mainly talking about the volume of interventions that can further satisfy demand if its level is much higher than supply.