National Bank of Ukraine currency interventions fall 40.6% in week

MOSCOW. Oct 7 (Interfax) - The National Bank of Ukraine (NBU) cut dollar sales on the interbank market by $227.2 million or 40.6% to $332.6 million in the past week, their lowest since the middle of April, Ukrainian media reported, citing data on the regulator's website.

The NBU purchased $1.5 million, the best result since the middle of April.

In the first four days of last week, the average daily negative balance of currency purchases and sales by legal entities fell to $11.8 million from $49.6 million for the same period the week before, amounting to just $47.3 million. A positive balance of $49.8 million was recorded on September 29, for the first time in quite a while.

The cash market saw a substantial increase in forex purchases by households, as a result of which the deficit rose to $132.28 million from Saturday to Thursday from $34.6 million the week before last. This was due partly to the fact that, after a pause of nearly a month, non-cash currency purchases exceeded sales from Tuesday to Thursday.

The official hryvnia-dollar exchange rate, which began last week at UAH 41.3811/$1, strengthened to UAH 41.1420/$1 in the space of two days, but fell to UAH 41.2286/$1 by the end of the week

On the cash market, the dollar exchange rate followed the official exchange rate trajectory over the past week, and remained virtually unchanged overall: the buy rate was around UAH 41.22/$1, and sell around UAH 41.30/$1.

"Short-term (1-2 weeks): base corridor of UAH 41.20-41.70/$1, with likely fluctuations and trending toward the upper limit. Medium-term (2-3 months): UAH UAH 41.30-42.00/$1," said experts at KYT Group, a major cash currency exchange market participant.

They said spreads on the cash market remained stable (UAH 0.40-0.50/$1), reflecting the controlled nature of the market and the absence of sharp fluctuations that could radically change the market situation.

As for the international context, the experts said after the Fed effectively cut the rate in September, markets have already priced in a "cheaper" dollar. Now, the focus is on what the Fed and ECB will do until the end of the year, with macroeconomic data (inflation, labor market and so on) serving as possible triggers.

"Long-term (6+ months): baseline scenario is still for a gradual hryvnia devaluation. Target is UAH 43.00- UAH 44.50 UAH/$ by mid-2026," the media quoted KYT Group as saying.