The pace of the hryvnia weakening over the past few weeks may create additional risks for the resilience of the foreign exchange (FX) market and, consequently, for price stability, according to the National Bank of Ukraine (NBU).

"Therefore, the National Bank is ready to take appropriate steps to build greater FX market resilience required for ensuring price stability in the future," the NBU said on Thursday morning in response to a request from Interfax-Ukraine.

The central bank said that up to now, exchange rate dynamics, despite a certain weakening of the hryvnia, have aligned with the NBU's goal of ensuring moderate inflation, as evidenced by its approach to the 5% target in June.

The current weakening of the hryvnia exchange rate in the FX market is attributed by the regulator to the expansion of net demand over the past two months under the influence of increased budget expenditures, a significant portion of which is materializing in demand for currency, the May currency liberalization, as well as the temporary reduction in the supply of currency by the agricultural sector. The latter factor is explained by the depletion of last year's harvest and the "effects of certain regulatory decisions on the deadlines for settlements on the export of certain types of agricultural products" (the Cabinet of Ministers petitioned the NBU to extend the deadline for the return of agricultural export proceeds to 120 days, previously reduced from 180 to 90 days).

All prerequisites for ensuring the stability of the foreign exchange market exist now, the National Bank said.

"Soon, currency from the sale of the new harvest will start to arrive, and the functioning of the maritime corridor creates opportunities for active exports of other commodity groups. International assistance from our partners will also soon increase: if in the first half of the year Ukraine received about $14 billion, the forecast for the second half of the year is $24 billion," the NBU reported.

In particular, this month Ukraine's central bank expects to receive $3.9 billion from the United States.

"Accordingly, international reserves will again exceed $40 billion," the NBU said in the response.

As reported, on Wednesday, July 17, the NBU lowered the official hryvnia exchange rate by another 20.5 kopiikas – to a new historical low of UAH 41.4627/$1. Since the beginning of July, the official hryvnia exchange rate has decreased by 92.5 kopiikas compared to 3 kopiikas in June and 90 kopiikas in May.

Since the beginning of 2024, the U.S. dollar has become more expensive growing by 9.1%, or by UAH 3.46, and since the NBU switched to a managed flexibility on October 3, 2023, by 13.4%, or by UAH 4.89.

The NBU explained the weakening in May by the increase in government spending after receiving external financing in March-April, as well as the impact of the largest package of currency restriction relaxations for enterprises announced on May 3 since the beginning of the full-scale war.