Two scenarios. What will happen to the hryvnia in September

Два сценария. Что ждет гривну в сентябре

The forecast of the hryvnia in September

The dollar against the hryvnia has broken a three-year record. What’s behind the strengthening of the national currency of Ukraine and when to expect devaluation.

All summer, the Ukrainian national currency has strengthened and has grown from 27 to 25 hryvnia per dollar, a record in three years. But with the onset of autumn began seasonal variations in the direction of the fall.

Experts predict the rate of hryvnia in September two ways: the minimum devaluation and stabilization at the level of 25.8 per dollar or strengthen to below $ 25 hryvnia per dollar. Корреспондент.net tells details.

 

The hryvnia exchange rate stabilization or devaluation

Already at the end of summer the dollar and the Euro went up. As stated by the head of the company’s analysts Forex Club Andrey Shevchishin, this was due to the arrival of the adviser to the American President John Bolton to talk about the dangers of Chinese investments in Ukraine.

In the following days, the hryvnia was stable, but, according to experts of the American Bank JP Morgan in a recent survey of East European markets, the current exchange rate of the hryvnia to the dollar is overvalued, so it can devalue to 26.5 by the end of September.

The main reason for the overvaluation of the hryvnia today, the American experts called weak exports. As you know, this year the negative balance of foreign trade of Ukraine amounted to 1.62 billion dollars, up 65.6 percent more than in the same period of 2018.

However, on 30 August , the national Bank said Cho, the terms of trade for Ukraine has improved due to the decrease of natural gas prices and rising prices for iron ore and grain on world markets.

In addition, increased revenues for the payment of labour from abroad, has decreased the amount of repatriation of dividends, increased interest of international investors in Ukrainian government bonds.

These factors offset the outflow of currency due to in particular the significant volume of repayments of government debt of Ukraine, says the report of the NBU.

Ukrainian Central Bank also reported a decline in geopolitical risks in Ukraine. The value of the Index, geopolitical risks in July 2019 has almost reached the level that was recorded in mid-2013.

But the currency market remains quite vulnerable to shocks both domestic and external, the report says.

“In particular, remain a significant internal political and geopolitical risks associated in particular with the ongoing military conflict in the East of Ukraine”, – stated in the report of the NBU.

External geopolitical risks to the hryvnia is a trade war between the US and China, as well as the weakening of the currencies of other developing countries, said the head of Ukraine EXANTE Vladimir Godforsaken.

“Trade war inhibit industrial growth worldwide, which causes a decrease of demand for the main export raw material of Ukraine and pulls a weakening currency. In addition to the agenda in August again began to seep disturbing news from Turkey and Argentina… Turbulence rates in developing countries often evokes a negative for the whole unit of EM currencies, which could become the main theme of September”, – the expert explains.

Analyst trading company Alpari Maxim Parkhomenko said that next week the hryvnia can expect a slight strengthening in connection with the auction of Bonds of internal state loan.

Financier Sergey Fursa also draws attention to this positive factor.

“About three and a half billion dollars was invested by foreigners in government securities,” he says.

Head of analytical Department Forex Club predicts that in September the dollar stabiliziruemost to 25-25,8 hryvnia.

“On the other hand, if members decide to open the land market, big business will begin to return capital to the country to spend money to buy a previously inaccessible asset. In this case, the dollar can fall in price to 24.7 hryvnia”, – says Andrey Shevchishin.

The portal of the Ministry of Finance forecasts for September, a fairly high volatility for the dollar. On the interbank market – in the range of 25-25,9 hryvnia, and in the cash market – in the range of 24.9-26 hryvnia.

He also listed positive and negative factors that impact the hryvnia exchange rate.

UAH to help:

  • active sales of foreign currency by exporters
  • the stability of the cash market, did not encourage the population to actively buy up currency
  • the likely decrease in the discount rate of the NBU at the beginning of September, which will provide the inflow of foreign currency
  • the potential opening of a land market
  • improving expectations about the resolution of the conflict in the Donbass
  • the adoption of the new Rada, a new necessary laws
  • the formation of Ukraine a certain margin on foreign currency liquidity

The hryvnia has:

  • threat of imminent default of Argentina
  • trade war US-China
  • the reduction of revenues from customs and tax revenues to the budget due to the “low” rate
  • the persistence of negative balance of trade

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