The weakening of the hryvnia at the end of 2023 was primarily due to seasonal factors.
This was stated by Deputy Chairman of the NBU Sergei Nikolaychuk on the air of the ICTV TV channel, transmits press service of the National Bank.
“The weakening of the hryvnia at the end of 2023 is primarily due to seasonal factors. Firstly, the demand for currency increased as a result of record budget expenditures in December. Secondly, traditionally at the end of the year the demand for currency from the population increases,” said the deputy chairman NBU.
Also, the foreign exchange market was put under pressure by psychological factors associated with the delay in the provision of international assistance.
At the same time, active hostilities, which continue, created a need for funding.
“Under a regime of managed flexibility, a change in the exchange rate in one direction or another is a normal phenomenon. As the NBU promised, the exchange rate can either weaken when the market situation worsens or change when the situation improves (as, for example, it was in October and the first half of November),” noted Sergei Nikolaychuk.
In addition, according to him, as declared, the National Bank is gradually increasing the amplitude of exchange rate fluctuations. This occurs as the foreign exchange market adjusts to managed flexibility.
“Accordingly, now fluctuations in the interbank market are somewhat greater than, for example, in October. At the same time, thanks to the existing preconditions, they are not threatening. Also, exchange rate fluctuations remain significantly less than before the full-scale war,” Nikolaychuk said.
He noted that today the exchange rate on the cash market, which is important for the population, despite a certain weakening of the hryvnia at the end of the year, remains more stable than, for example, in the fourth quarter of 2022.
In 2023, the official exchange rate of the hryvnia against the dollar weakened by less than 4%. The yield on hryvnia instruments more than compensated for this devaluation and remains significantly higher compared to instruments in foreign currencies. It also covers actual and expected inflation.
Accordingly, a return to a fixed exchange rate is not even being considered yet.
“The NBU moved away from it consciously and when the appropriate prerequisites for this were formed,” noted Sergei Nikolaychuk.
“The NBU has every opportunity to ensure exchange rate stability in the future. Within the framework of a managed flexibility regime, the hryvnia can both weaken and strengthen. At the same time, as our experience from 2016 to 2021 shows, a flexible exchange rate allows us in the long term achieve exchange rate stability,” he emphasized.
In addition, the managed course flexibility mode makes it possible to achieve a number of important objectives. One of them, according to Nikolaychuk, is maintaining the attractiveness of hryvnia instruments (deposits and government bonds).
“The current situation in the foreign exchange market is not unusual and certainly does not threaten the fulfillment of this task,” summed up the deputy head of the NBU.
2024-01-05 13:07:38
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