Seasonal factors in Ukraine behind hryvnia weakening in recent days - NBU

MOSCOW. Dec 14 (Interfax) - Seasonal factors are behind the slight hryvnia fall against the dollar in recent days, the National Bank of Ukraine (NBU) said.

"At present, we are witnessing the [...] seasonal process, when the need for the foreign currency is growing towards the end of the year. Those expenditures that have been accumulated throughout the year are being realized. They usually do not have time to realize them," Ukrainian media quoted NBU Governor Andrei Pyshny as saying at a press briefing in Kiev on Thursday.

This is what the NBU was striving for by switching to managed exchange rate flexibility, with the foreign exchange market getting back to its normal operation, he said.

"What we are seeing in terms of net [forex] demand regarding clients' non-cash transactions: it totaled $97 million in October, $61 million in November, we have been seeing an increase since the last ten days of November. And the average figure is $70 million in December. The higher demand causes the NBU to be more active on the market," NBU Deputy Governor Yury Geletiy said at a press briefing.

The NBU set the official hryvnia exchange rate for December 14 at its all-time low at 37.02 UAH/$1, at the close of trading on December 13, against 36.99 UAH/$1 the previous day. The hryvnia dropped almost 1% against the dollar since the start of the week, but thanks to its rise to 36.01 UAH/$1 in the last ten days of November since the NBU switched to managed exchange rate flexibility from the fixed exchange rate on October 3, the Ukrainian national currency fell only slightly more than 1.2% against the dollar.

On December 13, the hryvnia even rose to 37.65 UAH/$1 on the cash market after several days of decline. Hence, the NBU's lifting of restrictions on December 1 for banks and financial companies to sell cash currency to individuals resulted in a drastic narrowing of the spread between the rates on the interbank market and at the exchange offices.

The NBU's net sales in November fell to $2.46 billion from $3.34 billion in October and $2.69 billion in September. However, the reduction in foreign funding to $2.04 billion resulted in a decline in international reserves for the fourth consecutive month, down 0.5%, or by $187.8 million, to $38,785.2 billion.