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The dollar and euro are rising again: what to expect next week

It seems that the strengthening of the hryvnia exchange rate, which has lasted for the last two weeks, has stopped. Since Wednesday, December 16, the American currency has risen in price by 6 kopecks, and the European one – by 39 kopecks at once. On Wednesday, December 18, the NBU set official rates at UAH 27.82 per dollar and UAH 34.08 per euro. In the cash foreign exchange market, the dollar and the euro also rose by 10-30 kopecks. In exchange offices, you can return the American currency at an average of UAH 27.78, buy at UAH 28.01; European – hand over at UAH 33.78, buy at UAH 34.20. However, some experts believe that the current slight depreciation of the hryvnia is a temporary phenomenon and soon the Ukrainian currency will begin to strengthen again.

“Last week, the dollar against the hryvnia fell in all segments of the foreign exchange market by an average of 30 kopecks, – told “FACTS” analyst at Alpari Maxim Parkhomenko… – The supply and demand rates for the dollar on the interbank market, according to the company “UkrDealing”, during the same time fell from UAH 28.04-28.05 to UAH 27.83-27.84 – by 20 kopecks. Average rates of buying and selling cash dollars in banks for the week decreased from UAH 28.05-28.27 to UAH 27.80-28.10.

The active actions of the Ministry of Finance on the debt market allowed borrowing more than UAH 28 billion from investors over the past week. Of these, $ 3.5 billion came from non-residents who had previously exchanged currency for hryvnia. This allowed the national currency to strengthen. Next week, we are expecting repeated auctions from the Ministry of Finance, which may support the hryvnia.

In the coming week, we expect stabilization and a moderate depreciation of the dollar against the hryvnia to UAH 27.60-27.70, “ – Maxim Parkhomenko predicts.

Experts note that the situation on the world commodity markets contributes to the export of Ukrainian goods and the strengthening of the hryvnia.

“On Thursday, at the interbank market at the hryvnia to the US dollar, a support level was formed – UAH 27.80, – told “FACTS” RoboForex analyst Andrey Goilov… – Alfa Bank bought foreign currency for its non-resident clients. The National Bank did not participate in the auction. Quotes of the national currency against the dollar and the euro moved in different directions. Thursday trading on the dollar – hryvnia currency pair ended at UAH 27.84, the single European currency strengthened against the hryvnia to UAH 34.11.

Despite a poor grain harvest, export earnings did not drop significantly. In particular, steel prices have grown by one and a half times, the growth in the cost of agricultural crops reaches 30%. Oil and gas prices did not recover to their March levels, which significantly constrains import growth. All of the above strengthens the exchange rate of the national currency against the euro and the dollar. Nevertheless, the state budget for next year was adopted with a deficit, which will put pressure on the hryvnia.

Cooperation with the International Monetary Fund remains the main factor in the stabilization of markets, so any problems in negotiations with the IMF will lead to the devaluation of the national currency. The NBU is likely to continue buying dollars to replenish Ukraine’s international reserves.

Next week, we expect a correction to the level of UAH 27.90 at the dollar against the hryvnia. Euro versus hryvnia is likely to strengthen to UAH 34.15 “, – Andrey Goilov considers.

The hryvnia exchange rate next week may be strengthened by another sale by the Ministry of Finance of domestic government bonds (OVDPs).

“At the opening of trading on Friday, the hryvnia appreciated to UAH 27.75 per dollar in anticipation of a large placement of government bonds next Tuesday and a possible resumption of the supply of non-resident currency before this issue, – told “FACTS” Head of Analytics Department of Forex Club Andrey Shevchishin… – Also, the hryvnia reacts to the signing of an agreement on financial cooperation between the government of Ukraine and Germany. This is a framework agreement that defines the list of projects, the financing agreements of which were reached by the German government during the Ukrainian-German negotiations during 2011-2019.

The agreement provides for the provision of credit resources on concessional terms in the amount of up to 214.6 million euros, which can be used for the implementation of investment projects, including to support municipalities. The funds can be used in the energy sector, to support small and medium-sized businesses, or for the reconstruction of communal infrastructure in the regions. In addition, the agreement provides for the provision of 40 million euros on a gratuitous and non-repayable basis – in the form of grants, of which 30.5 million euros will be directed to “improve the vocational education system and strengthen local self-government in Ukraine”.

Meanwhile, an article published by the Bloomberg agency about President Zelensky’s defeat in the fight against corruption and the loss of his credibility is in the negative. However, while investors and non-residents vote with money, the hryvnia is getting support thanks to the high rates of return offered by the Ministry of Finance.

Also on the eve of the resumed payments on VAT, which indicates the “opening of the tap” of liquidity after large-scale capital raising to cover the deficit of the state budget. The future pressure on the hryvnia will depend on the speed and scale of the inflow of this liquidity, since part of the funds will enter the market to buy foreign currency.

The hryvnia will likely remain in the range of UAH 27.7-27.8 per dollar in the near future. If significant currency sales begin, only the NBU will be able to hold the market, “ – said Andrey Shevchishin.

It should be noted that the law on the state budget for 2021 provides for the forecast rate of the national currency at the level of UAH 29.1 per dollar. However, in an exclusive interview with “FACTS” investment banker Sergei Fursa stated that next year the dollar rate of coins will be 27, and even 26 hryvnia. According to him, the situation is now very favorable for the national currency. Prices for Ukrainian exports have skyrocketed to unprecedented levels. And this is the main factor supporting the hryvnia.

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Author: Chief Editor