National Bank of Ukraine's forex interventions drop 26.5% last week, hryvnia strengthens

MOSCOW. Dec 30 (Interfax) - The National Bank of Ukraine (NBU) reduced dollar sales on the interbank market by $311.2 million, or 26.5% week-on-week to $862.6 million last week, Ukrainian media reported, citing the statistics published on the regulator's website.

In the first four days of last week, the average daily negative balance of currency purchases and sales by legal entities dropped to $109.1 million from $148.6 million for the same period the week before, amounting to $436.5 million in total, the NBU said.

At the same time, the cash market's negative balance from Saturday to Thursday fell to $26 million from $28.3 million the week before last. Purchases of non-cash forex were larger than its sales for all of these days.

The official hryvnia-dollar exchange rate, which began last week at UAH 42.2481/$1, strengthened to UAH 42.1541/$1 in the space of three days, ending the week at the level of UAH 41.9331/$1.

The dollar exchange rate on the cash market followed the trajectory of the official exchange rate, with the buy rate losing nearly 22 kopecks in total over the week to UAH 41.79/$1, and the sell rate 14 kopecks to UAH 42.21/$1.

According to experts from KYT Group, a major cash currency exchange market participant (Liberty Finance LLC), in the short-term, 1-2 weeks, the base corridor is UAH 42.15-42.55/$1. They expect the exchange rate to stay within UAH 42.30-UAH 43.50/$1 in the mid-term, which is 2-3 months.

"The Federal Reserve's monetary policy, i.e. further steps to cut the key rate, will impact the dollar's weakening on the international market. In Ukraine, the hryvnia will be influenced by factors such as the state budget deficit, gas purchases, imports of energy equipment, as well as new aid disbursements from partners," the KYT Group experts said.

In the long-term, more than six months, a baseline scenario is UAH 42.6-UAH-44.60/$1 for H1 2026. Although devaluation will persist as the dominant trend, the NBU's continuous interventions will help maintain smooth fluctuations of the exchange rate and a flexible exchange rate trajectory, they said.