Hryvnia to devaluate to UAH 29-30/$1 by late 2020 – ICU forecast
The hryvnia will devalue to UAH 29-30/$1 at the end of 2020, and by the end of 2021 it will be UAH 29.50-30.50/$1, Head of Corporate Research at ICU investment group Oleksandr Martynenko has said.
"We expect that at the end of the year it will be the range of UAH 29-30/$1. Next year, the gradual soft weakening of the hryvnia will continue," he said during an online presentation of the group's updated economic forecasts on Tuesday.
"We saw lively rhetoric about the exchange rate, about how, in the opinion of some analysts, observers and even members of the government, it should help implement the budget, support exporters, and accordingly, create serious negative expectations of further weakening of the hryvnia. And now they, in our opinion, continue to 'hang' as a certain burden on the exchange rate," Martynenko said.
This, as well as the expected growth of the current account deficit, will create pressure on the exchange rate, the expert said.
The weakening of the exchange rate in 2021 will contribute to the deterioration of Ukraine's trade positions. However, support for the exchange rate and the balance of payments will be provided by funds from international lenders and an inflow of investments, Martynenko said.
As for the current account, ICU has improved its forecast for 2020 to $6.2 billion, or 4.2% of GDP.
As Martynenko said, the reduction in demand for imports, travel restrictions and a decrease in investment income payments were stronger than expected, but remittances were quite stable.
In 2021, the current account will return to a deficit of $3.7 billion, or 2.4% of GDP, the ICU predicted.