Increased demand for foreign exchange — a big problem for the hryvnia.
The hryvnia exchange rate today broke through the psychological mark of 29 USDUAH on the interbank market. Experts told why the hryvnia is falling and who is buying up the currency, reports the Chronicle.info with reference to Focus.
On January 27, the increased demand for foreign currency and not the biggest supply provoked a rush of the hryvnia towards devaluation. If in the morning trading on the interbank market was in the range of 28.8-28.9 USDUAH, then by 12.00 the maximum dollar rate in Ukraine reached 28.9 USDUAH, and for some transactions — 29.0-29.03 USDUAH. However, by the end of the day, the hype subsided, and the transaction rate fell back to the levels of 28.95-28.97USDUAH.
The maximum dollar rate crept up to 29 USDUAH
As Anna Zolotko, director of the treasury operations department of Unex Bank, notes, on the interbank in general, there is a significant imbalance between the supply and demand of foreign currency.
«Tense information background on the geopolitical situation has led to a significant increase in demand for the currency. At the same time, the supply has become smaller. One of the main sources of additional demand was the active purchase of foreign currency by non-residents, repatriating profits, including withdrawal from government bonds. But, of course, demand has grown in almost all sources: individuals and businesses are buying the currency more actively. There is an increased demand for the purchase of energy resources«, says Anna Zolotko.
According to her, the NBU is actively participating in the auction.
«Moreover, since Wednesday, his participation has increased significantly. Today, the National Bank defended the level of 28.80-28.81 USDUAH. And the volume of interventions (currency supply on the market by the National Bank — ed.) amounted to at least $230 million. In the morning of Thursday, the NBU carried out interventions in the range of 28, 97–29.02 USDUAH», notes Anna Zolotko.
The expert stressed that demand continues to prevail over supply due to applications from energy importers and non-residents, although the NBU is actively trying to bring down demand by offering currency at auctions «at the request of the best rate».
«According to the Bloomberg system, in the first three days of the week, transactions (for the purchase of foreign currency) were concluded for $1.3 billion. This is even higher than the average for the week. And on Wednesday, January 26, the trading volume on Bloomberg exceeded $500 million. Currently, the National Bank is balancing the market with its intensive interventions. This is what is holding back the growth of quotations», explains Anna Zolotko.
Yuri Krokhmal, head of the sales service for treasury products «Avangard Bank» .
«The National Bank daily participates in the trading of the ISRU, selling the currency and consistently adhering to its strategy of smoothing out excessive fluctuations. Thus, the rate is growing, but at a relatively moderate pace and without panic — everyone can buy the currency. This strategy is fully consistent with the adopted concept of a floating rate — the NBU does not «protect» any chosen level of the course, but stabilizes the market during periods of strong imbalances», emphasizes Krokhmal.
Strong pressure is exerted by non-residents who withdraw from Ukrainian government bonds. According to the NBU, as of January 27, the volume of the government bonds portfolio of non-residents amounted to UAH 82.68 billion, while on December 28, 2021 it was UAH 92.57 billion. That is, non-residents sold securities in the amount of UAH 9.89 billion in just one month. Yuriy Krokhmal notes that in recent weeks, non-residents have been selling government bonds for UAH 600-700 million daily. and, accordingly, this is converted into demand for currency in the range of $20-22 million.
Anna Zolotko also says that speculative bidders of the MVRU have become more active lately. And on the other hand, exporters are holding on to their currency — they are trying to minimize the sale of their foreign exchange earnings: now the State Treasury is making large payments of VAT refunds, about UAH 10 billion have been transferred to exporters since the beginning of the week.
Strategic Development Analyst of the Bank « ;Pivdenny» Konstantin Khvedchuk also told Focus that since the beginning of the year there has been a decrease in the volume of foreign currency sales by clients while maintaining high demand.
Answering the question whether there are certain speculations of large banks on the market, the head of the analytics department of ForexClub Andrey Shevchishinnotes that this is also possible. Earlier, the media reported that allegedly Citibank influences the exchange rate, pushing trading towards 29 USDUAH (today, the maximum dollar exchange rate has almost reached this mark). Andrey Shevchishin is sure that Citibank's influence is due to the fact that it has many non-resident clients.
«The lion's share of non-residents work through Citibank, so the market follows the bank as an indicator of the activity and presence of non-residents in trading,» the expert notes. Yuriy Krokhmal says that the sellers of the currency obviously benefit from the weakening of the hryvnia, but this is more likely a consequence of the current situation on the market caused by external factors than the result of any planned actions of one of the players.
According to Shevchyshyn, banks have their own currency position and make speculations, but in most cases they only fulfill the orders of clients: export-import companies, investors and the public.
«Now the demand comes from many clients, some want buy dollars to pay for imports or save up for import operations; others buy, fearing hryvnia devaluation; still others buy for speculation. There are not so many of the latter», Andriy Shevchyshyn is sure.
Some experts are sure that the hryvnia’s falling trend will eventually be replaced by the national currency’s strengthening trend.
«The market is very sensitive to background information. The degree of tension will sooner or later decrease — then the demand for the hryvnia will increase again, its strengthening will resume,» Konstantin Khvedchuk is sure.