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Ukrsibbank Research: FX and interest rates: UAH breached 27-mark; unlikely to slip further

June 06, 2019 | Cbonds

Last week’s UAH depreciation due to a temporary factor - value-added tax (VAT) refunds, developed into a sharp downturn as new downside factors emerged. While UAH was trading around 26.8 through the last days of May, on the first trading day of June UAH dropped below 27 in tandem with emerging market (EM) assets, which depreciated after trade tensions between the United States and China shifted into a higher gear.
Against the background of deteriorating external financial conditions, as well as increased uncertainty in Ukraine, the NBU acted as net seller of FX currency last week: the central bank sold USD43mn, while bought USD11.5mn.
USD/UAH is likely to stay under pressure for some time. Ukrainian exporters used to reduce supply of FX on the market after receiving VAT refunds as their demand for hryvnia temporarily decreases. Fresh FX injections from foreign investors might provide support to UAH, but we expect limited inflow from non-residents, since increasing recession fears about global economy on the backdrop of continuing trade wars will draw interest to safe-haven assets.

Company: Ukraine

Full company nameUkraine
Country of riskUkraine


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