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Will the hryvnia fall: exchange rate forecast for autumn

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Photo: NBU/FB

Photo: NBU/FB

Since the beginning of the year, the official exchange rate of the Ukrainian currency has appreciated by 1.34 UAH (or 5%) against the US dollar. For instance, if on January 1 the hryvnia exchange rate was at the level of 28.27 UAH per dollar, then as of August 30 it was fixed at 26.93 per dollar UAH.

At the same time, the official hryvnia exchange rate decreased by 0.28 UAH (or 1.04%) over the past week: on August 23 it was fixed at 26.65 UAH per dollar, and on August 30—26.93 UAH per dollar.

The Page has asked financial experts what Ukrainians should expect and what the dollar exchange rate will be in the fall.

Traditionally, it is believed that autumn—the beginning of winter—is a seasonal downtrend for the hryvnia, Taras Kozak, the President of the Investment Group Univer. There are a number of objective reasons for the hryvnia fall at this time, including large volumes of natural gas purchases and imports of household goods (to prepare for the Christmas and New Year holidays). To do this, importers need currency, and the demand for it is growing.

"On the other hand, we know that a record grain harvest is expected in Ukraine this year. In addition, grain prices are significantly higher than last year. Prices for iron ore and metal also went up. Thus, imports and exports are more or less balanced in terms of volumes, and one cannot say that something threatens the hryvnia."

Taras Kozak

Taras Kozak

President of the investment group Univer

In addition, by the end of the year there is a chance to obtain not only $600 million from the IMF, but also 600 million euros from the European Union.

According to Kozak, the huge volumes of currency coming into the country from the Ukrainian migrant workers can be called another factor impacting the exchange rate. In the first half of the year, another record was set, and the National Bank expects that for the whole of 2021 about $13 billion will come to Ukraine from the migrant workers.

In addition, our IT specialists are also increasing volumes by about 20% per year. An inflow of more than $5 billion is expected this year.

Quote"Such a balance of payments looks quite stable, and there should not be significant fluctuations in the exchange rate, unless there is another "black swan". The most likely scenario by the end of the year will be the rate of 26.5-27.5 UAH per dollar," Kozak predicts.

Galyna Kheylo, Vice President of the Association of Ukrainian Banks, does not see any prerequisites for a significant spike in the dollar exchange rate. According to her, the dollar always rises in price in September. This is due to the preparation for the heating season, as well as the beginning of the harvesting campaign. In addition, we usually have a large repayment of the IMF debt in September.

However, last week the IMF transferred more than $2.7 billion to Ukraine through an additional issue of Special Drawing Rights (SDR). The IMF allocates these funds to all member countries of the Fund for economic recovery after the coronavirus crisis. This, of course, changes the picture a little: now the dollar will be in abundance.

«If we didn’t have this "gift" from the IMF, then the rate would definitely increase in the fall, since we need to give money to the IMF and for dividend payments. All this requires buying dollars. And when demand increases, the exchange rate also increases. I do not think that the rate will change significantly in any direction. I am deeply convinced that our exchange rate is a value that is more political than economic. In my opinion, the hryvnia will be in the range of 27.0 — 27.5UAH per dollar.»

Galyna Kheylo

Galyna Kheylo

Vice President of the Association of Ukrainian Bank

At the same time, financial analyst Bohdan Slutskyi believes that the national currency will continue to weaken slowly.

"Among the factors fostering the hryvnia cheapening, one can single out the reimbursement from the budget of value added tax to exporters in hryvnia, which reduces the currency supply on the market, because they do not need to sell it to carry out current operations within the state. One can also pay attention to the behavior of importers, who, before the start of the autumn season, taking into account the trend of the national currency strengthening, have increased the demand for it."

Bohdan Slutskyi

Bohdan Slutskyi

Financial Analyst

In the long term, one can also talk about the hryvnia stability.

According to the Minister of Finance of Ukraine Serhii Marchenko, there will be no sharp fluctuations in the exchange rate of the hryvnia against the dollar next year.

Quote"I want to say that stable exchange rate dynamics is assumed. No surges and shocks are expected," he said during the live interview.

According to the Minister, the Cabinet has submitted to the Verkhovna Rada the Budget Declaration for 2022—2024 indicating the forecast of the hryvnia exchange rate for subsequent years—at the level of 28 UAH per dollar on average for the year.

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