Expert opinion: the exchange Rate. Forecast for 01-07 July

01.07.2019


exchange rates: the forecast for 01-07 Jul from expert PRAVEX Bank Artem Krasovsky, Director of the Department of the Treasury and stock markets.

Last week the foreign exchange market was marked by no sudden changes or big events in economic and political life of the country.

the national currency virtually unchanged for the week (opening at the level of 26.13 / 19 hryvnia per U.S. dollar, closing 26,14 / 16), and the main factors influencing currency rates, were to be expected:

• continuing interest from non-residents to hryvnia government bonds. In particular, at the auction the Ministry of Finance on Tuesday alone, 6-year bonds were placed with a 4.2 billion UAH, and the size of the portfolio of government bonds in the hands of non-residents set a new record, exceeding 57 billion for the week;

• continuous presence on the interbank market the National Bank of Ukraine. Stable excess of foreign currency supply over demand allows NBU to confidently buy the excess to replenish the foreign exchange reserves without the risk of the hryvnia. Total for the week +44 million dollars, from the beginning of June +322 million, and YTD + 1.4 billion – a good result;

• to support the hryvnia also played the end of the month, when businesses are in need of local currency for implementation of budget payments and salaries.

• a large refund of VAT to the state Treasury over the past week were paid more than UAH 10 billion from 13.6 billion UAH paid in June. However, this factor could not shake the stable national currency.

After two public holidays and shortened weeks preceding the end of the month and the quarter, when market participants close their payment of taxes and foreign trade contracts, next week we can expect a partial reduction of business activity. The beginning of the month, amid the holiday period and the lack of high-profile events in the political calendar (at least a couple more weeks to stretch the parliamentary elections), should not contribute to high exchange rate volatility. Monday will be increased by the sale of foreign currency after an additional output in Ukraine last Friday that could lead to the strengthening of the hryvnia at the beginning of the week. On the other hand, the beginning of the month is traditionally a period of currency purchases by foreign companies under dividend payout. But the main attention is habitually directed at foreign investors with their potential purchase of government bonds on the behavior of the NBU, which will likely prefer to absorb the excess currency in reserves.

Our rate forecast for the week: 26.10-26.50 hryvnias per U.S. dollar.

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