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 Ukrainians are Buying up Dollars While National Bank is Getting Rid of Euro

The amount of the foreign currency bought by individuals has hiked in September to a record breaking $2.9 billion.

Kommersant-Ukraine reports that the NBU released the following numbers: the cash market deficit in the amount of $1.8 billion has pressured the Interbank exchange and made the NBU conduct the largest interventions in the past year - their negative balance constituted $1.51 billion. However, the regulator did not sell a single dollar. The NBU was getting rid of the euro (1.2 billion euro at the price of 10.13 UAH/EUR) and the British pound (200 million at 12.7 UAH/GBP).

"The right way to sell dollars is that the National Bank announces an intervention but it sold euros to Oschadbank (the State Bank) which it converted into dollars and sold in the market," explained a manager of one of the large banks. After hryvnia's drop on September 4, Oschadbank came out on the market the next day with an offer of large currency volumes at 8.14 UAH/USD.

"The NBU explained that it is much easier for them to conduct interventions through state owned banks," says a treasurer of one of the large banks, "Converting euros into dollars is a technical operation and it is conducted in seconds. Probably the NBU thought that considering the current rates it was more profitable to sell the euro."

Bankers who the journalists talked to asked not to mention their names or banks where they work. "Considering the way that the NBU reacts to anything related to currency and reserves they will implement sanctions against us. You don't want me to get fired, do you?" explained one of them.

The National Bank is not hiding the fact that they are changing the reserve structure with plans to use different currencies, particularly Canadian, Singapore and Swiss.

"We are considering such option and have presented our proposals to the management," said head of Currency Reserve Department of the NBU Oleksandr Dubihvost.

The idea to diversify currency risks is reasonable, "But there is really nothing to talk about yet since we don't know the currencies and terms of investment. The National Bank keeps it a secret," noted one of the bankers.

Financial experts have no doubts that currency demand dynamics will be similar to the end of last year.

"It started in 2010, when September sees the largest hike in currency buying. It happened again last year and we had the same thing recently," stressed a treasury director of a large bank, "People are buying currency and deposit most of it in their accounts. We can already see the decrease in demand, people started to buy less."

 
 
 
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