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 Once National Bank Stops Selling Dollar, Hryvnia Will Continue its Decline

The US dollar fell by 7.8 cents in the Interbank market on November 15-16 , returning to the start of the month figures.

The hryvnia's strengthening was due to its shortage, in part caused by the National Bank, reports Kommersant-Ukraine.

A sharp dollar rate hike at the beginning of last week was followed by a no less sharp drop in its rate - the hryvnia strengthened by 1% in just 2 days.

Monetary indicator declined from 8,277-8,296 UAH / USD on 14 November to 8,198-8,223 UAH / USD on 16 November.

The fever that has been observed starting September-October, when Ukrainians bought record volumes of currency - 2,9-3,3 billion and growth of the dollar in the interbank market have forced the regulator to intervene.

"There is a huge demand for dollars in the Interbank market, and a very low offer," said the director of the National Bank's monetary policy department Yelena Shcherbakova.

To meet the demand, the National Bank came into the interbank market with the intervention at 7.993 / 8.05 UAH / USD on November 14.

Bankers estimate that 30% to 50% of all applications were filfilled.

In addition, the NBU worked through Oschadbank.

"At the end of the week everyone could purchase the currency in Oshchadbank at 8.25 UAH / USD. At that the institution bought the dollars at the NBU for 8.05 hryvnia," said the treasurer of one of the banks with foreign capital.

Despite the fact that the National Bank has recognized the need for a floating exchange rate of the hryvnia, no one is planning to let the currency float freely in the nearest future.

"As of November results we are likely to see a sharp decline in foreign exchange reserves of the National Bank. According to unofficial information, its reserves are already very close to $ 24 billion. Additional 1-2 billion dollars are drawn on paper with the help of swaps," said the managing partner of the Capital Times investment company Eric Nayman.

Experts say that the measures taken by the regulator are only short-term and as soon as the NBU stops selling the dollar, the hryvnia will continue its decline.


 
 
 
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