VR Committee chair expects no rapid fluctuations on Ukraine’s FX market

The relevant statement was made by Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy Danylo Hetmantsev on Telegram, commenting on his forecast for the exchange rate of the Ukrainian hryvnia, an Ukrinform correspondent reports.

“I can say with relative certainty that I do not expect any rapid changes and fluctuations on the foreign exchange market until the end of this year,” Hetmantsev noted.

In his words, the situation on the foreign exchange market has been and continues to be controlled thanks to international support and the consistent actions of the National Bank of Ukraine (NBU).

“The Government is close to completing debt restructuring under Eurobonds, saving USD 11.4 billion through debt service payments over the next three years and USD 22.75 billion by 2033,” Hetmantsev pointed out.

According to him, Ukraine has a sufficient level of international reserves, whose volumes are now 37% higher compared to the beginning of the war and enough to cover imports, fulfill any foreign exchange obligations of the Government and the National Bank, and maintain the exchange rate in the short term.

Today, Ukraine has a clear understanding of the necessary external financing in 2024. Hetmantsev emphasized that Ukraine had already received USD 16 billion in international assistance, and about USD 22 billion was expected to come from the EU, the United States, the IMF, and the World Bank before late 2024.

“The NBU is maintaining a relatively tight monetary policy with high positive real interest rates (in July, the NBU’s key policy rate was 13%, and annual headline inflation was 4.8%) and, accordingly, the attractiveness of hryvnia assets, which is restraining the flow of hryvnia resources to the foreign exchange market,” Hetmantsev explained.

At the same time, he outlined the factors of pressure on the hryvnia exchange rate, such as the continuous foreign trade deficit at an average level of USD 2.5 billion per month; a decline in the volume and rhythmicity of external financing compared to last year; and the expansion of foreign exchange liberalization as part of the NBU’s transitional monetary and foreign exchange policy.

A reminder that, as estimated by the Association of Ukrainian Banks (AUB), the average annual exchange rate of the Ukrainian hryvnia will not exceed UAH 40.5 for the U.S. dollar in 2024.