Expert opinion Forecast of the exchange rate before August 12

05.08.2019

exchange rates: the forecast until 12 August from expert PRAVEX Bank Artem Krasovsky, Director of the Department of the Treasury and stock markets , PRAVEX Bank

Last week, the currency market was in its way the climax of the hryvnia and was characterized by two main events: a record auction of the Ministry of Finance on placement of government bonds in the first half of the week and the ensuing disagreements between the NBU and the Finance Ministry on what to do with excess (in the opinion of the Ministry of Finance) the revaluation of the national currency, is actively discussed in the information space of the country in the second half of the week.

continuing the wave of positive concerning the Ukrainian debt instruments from foreign investors at auction on Tuesday, MinFin attracted UAH 17 bn – an unusually large volume for our market, from which a large portion of long-term bonds (2 and 6 years), which, of course , and bought the non-residents, increasing its portfolio to another record high 87 billion UAH. In turn, it gave a record inflow of foreign currency (about $ 500 million.) Interbank foreign exchange market, and without having opened the week on the minimum values of the dollar this year 25.30 / 40 hryvnia per U.S. dollar, and then continued to decline in the first half of the medium has reached its new low of 24.93 / 96 – minimum during the week, but also for the previous few years (the last time this course was in 2016). But as it turned out, virtually all of the excess currency was effectively to absorb the NBU, in the first three days of the week managed to buy in the reserves of more than $ 500 million. (And again, a record amount) and since Wednesday noon, the market suddenly left without oversupply warming up and wanting to have time to "lock in" favorable rate begins steadily to win the dollar, closing the week at around 25.50 / 55 above opening levels in recent days, weeks, even forcing the Bank to come up with a small sales and to bring down the panic.

the Demand for currency was spurred by the information about potential limitations of the scope of the upcoming placements of t-bills at the weekly auctions of the Ministry of Finance the amount of 3 billion UAH, which were the result of discussions between the NBU and the Ministry of Finance regarding the search of consensus between the need to attract funds public debt – on the one hand, and prudent exchange rate policy that does not threaten the trade balance and the budget execution on the other. This innovation can significantly reduce the amount of foreign exchange earnings from foreign portfolio investors, which was in the last few months the main "guarantor" of stability and strengthening of the hryvnia.

given this information, we can assume that we are not waiting for a less busy week, and quite possibly the "bottom" of the dollar against the hryvnia, this year we have already passed last week. Significant, in this connection, will the next auctions of the Ministry of Finance which will be judged whether, and if so, for how long, the Ministry of Finance will limit the volume of placement and especially those who will be offered the most long-term bonds (the closest 5-year-old scheduled for August 27) that the interest of non-residents.

in the meantime, the Forex forecast for the week 25.50-26.00 UAH. for the U.S. dollar.

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