Hryvnia weakening through flexible forex rate helps curb inflation - NBU Governor

That’s according to the National Bank Governor, Andriy Pyshnyi, who wrote this in an oped for Economic Pravda.

"In the year of managed flexibility, the hryvnia official exchange rate against the dollar weakened by almost 13%. This happened against the background of a combination of exogenous (external - ed.) factors, softening of monetary policy and currency restrictions by the National Bank," the head of the NBU noted.

At the same time, he noted that the weakening had little effect on general inflation. According to the head of the regulator, inflation remained close to the NBU's target of 5%.

The situation with foreign trade also improved as its deficit decreased by $2.3 billion over the eight months of 2024 against last year.

Pyshnyi also stated that the hryvnia weakening did not reduce the attractiveness of assets in the national currency. If the UAH to USD exchange rate on the cash market weakened by 9% over the year, the rates for hryvnia deposits exceeded 12%, and those for domestic bonds reached 19%.

"In the context of hryvnia attractiveness, our task is primarily to protect the savings of the population in hryvnias from inflation. This protection was fully ensured, including thanks to the moderate exchange rate dynamics," the head of the NBU emphasized.

As Ukrinform reported earlier, on October 3, 2023, the NBU switched from a fixed hryvnia exchange rate to managed flexibility.

On October 3 2024, the National Bank set the official exchange rate at UAH 41.275 to the dollar.

Photo: NBU