In recent months, the Ukrainian foreign exchange market has shown high volatility due to growing demand for foreign currency.
Our view:
The significant weakening of the hryvnia in early September, from 41 UAH to 41.51 UAH/USD, was caused by elevated demand. The imbalance had a fundamental basis: businesses needed to pay dividends and settle foreign currency obligations. Intervention by the regulator was entirely appropriate — the NBU performed its role. As a result, the average weekly volume of NBU interventions in September increased by 34% compared to August, from $582 million to $777 million.
These actions allowed demand to stabilize and the hryvnia to strengthen to 41.1–41.2 UAH/USD. Moreover, in early October, demand and supply found equilibrium, enabling the currency to remain in that range. The NBU gradually reduced currency sales on the interbank market, allowing the market to maintain the formed balance.
However, calm on the currency market is temporary. OTP Capital expects that a significant budget deficit this year and next, rising expenditures, and accelerating inflation will create conditions for hryvnia devaluation. Limited exports and gradual easing of currency restrictions under the IMF’s EFF program will also contribute. As a result, hryvnia devaluation is likely in Q4 2024, reaching 41.5–42.5 UAH/USD, and in 2025 the weakening trend may continue, possibly reaching 44–45 UAH/USD.
OTP Capital continuously monitors the economic situation and adjusts investment strategies according to market changes. Our funds are designed to provide stable returns even under economic instability.
If you have questions or would like investment advice, we are always happy to assist.
