In early 2024, the National Bank is expected to continue its active influence on the foreign exchange market of Ukraine, while the hryvnia will gradually weaken. According to experts' forecasts, the dollar exchange rate on the interbank market may fluctuate within the range of 37.70-38.50 hryvnias, and an additional increase of 50-60 kopecks is expected on the cash market.
Anton Kurinny, a dealer in the global markets department at OTP Bank, believes that Ukraine traditionally experiences a currency deficit in early January due to a decrease in exporters' foreign exchange earnings and the pressure of budget payments in December. This situation may lead to an increase in demand for currency, which, in turn, will force the National Bank to actively intervene in the market.
"We expect increased demand for currency or a smaller inflow of export foreign exchange earnings at the beginning of the year. This will force the National Bank to actively participate in trading," Kurinny noted.
The regulator plans to continue to support the flexible exchange rate strategy and gradually weaken the hryvnia. The expert notes that the National Bank will conduct active and passive operations, and its behavior may be somewhat unpredictable for market players.
“We expect trading in the corridor of 37.70-38.50 UAH/dollar,” the banker predicts.
It should also be noted that the negative impact of delaying international aid to Ukraine on the foreign exchange market has already been warned. Kurinny believes that the regulator is considering different scenarios and has a certain strategy for influencing the market depending on the news.
“That is, we will observe either increased intervention activity during positive news, or a certain weakening of the hryvnia during a period of negative expectations and delayed negotiations related to providing Ukraine with financing,” he said.
Regarding the impact on inflation and the dollar exchange rate, the National Bank of Ukraine has identified stability in the foreign exchange market as one of the key factors in slowing inflation. According to Kurinny, the current level of inflation allows the exchange rate to move freely, and the regulator to consider further strategies to curb inflation.
"The NBU has been adhering to an inflation targeting strategy for a long time. The regulator draws conclusions about the exchange rate strategy based on the analysis of all data," the expert noted.
In December, banks were able to sell currency to the population at a better rate, which led to a decrease in the difference between the rates on the interbank and cash markets. According to Kurinny, the difference between these rates diverged to the level of 50-60 kopecks per dollar.
“The difference between the cash and non-cash market is unlikely to exceed 50-60 kopecks. Although, of course, sometimes you can find a spread in small banks when the hryvnia strengthens in the non-cash market, this is more of a temporary “promotion” that you can try to grab in time,” the banker noted.
The dollar exchange rate increased in early December, which is attributed to seasonality and increased demand for foreign currency for purchases of imported goods. The Chairman of the National Bank of Ukraine, Andriy Pyshny, explained this increase by seasonal factors and increased demand for foreign currency for imports.
Overall, the Ukrainian foreign exchange market is forecast to be dynamic in early 2024, and market players should follow the news and decisions of the regulator for successful trading strategies.
