10:23 01.08.2019

NBU won't discourage consolidation of national currency

2 min read
NBU won't discourage consolidation of national currency

The National Bank of Ukraine (NBU) will soften sharp rate movements, however it will put interfere in the market trend of national currency consolidation, NBU director of the open markets department Serhiy Ponomarenko has told Interfax-Ukraine.

"A hryvnia rate is floating one in Ukraine, not a fixed one. We have no such strategy to defend any figure, for example, to prevent the hryvnia from consolidation on the level of 25 hryvnias per 1 dollar or not to make depreciate to less than 30 hryvnias per one dollar. This is what floating currency policy is. It changes depending on demand and supply," he said, responding to questions about whether significant consolidation of the Ukrainian hryvnia is reasonable.

According to Ponomarenko, during operations on the interbank foreign exchange market, the NBU continues to adhere to the currency intervention strategy for 2016-2020, which does not affect the direction of the hryvnia exchange rate caused by the fundamental economic factors.

According to him, market factors favor strengthening of the hryvnia exchange rate. First of all, it happens due to the growing interest of non-residents to the hryvnia government bonds, the favorable situation for Ukrainian exports on the foreign markets, as well as the relatively low import rates and repatriation of dividends. The NBU has an opportunity to replenish international reserves due to the favorable situation in the foreign exchange market for most of this year.

"The formation of such kind of a safety cushion will be an important factor in smoothing out of significant exchange rate fluctuations in future periods, as well as during the period of peak payments of Ukraine's external debt during 2019-2021," said Ponomarenko.

The central bank bought about $170 million on an interbank foreign exchange market, over $1 billion since early July and over $2.5 billion from the beginning of 2019.

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