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Ukrsibbank Research: FX and interest rates: USD/UAH failed to rally after striking debt auction

January 16, 2020 | Cbonds

The Hryvnia failed to set on a recovery course after some retreat before the holidays, despite striking demand for public debt, revealed during the last FinMin’s primary debt auction.
A record-high appetite for government bonds seen on Tuesday for a while revived fears in the market of another wave of local currency appreciation. This resulted in the USD/UAH pair rising this morning to 23.96 figure. The trend, however, didn’t last long due to central bank’s active interventions, and the hryvnia ended trading day at around 24.04 level.
This year the impact of FX inflows from foreign accounts into public debt might be less perceptible than in 2019: on Dec 12th, 2019 the National bank of Ukraine (NBU) increased planned amount of daily interventions on the interbank FX market by USD20mn - to USD50mn.
Besides, on Jan 10th, 2020 the NBU doubled the limits on banks’ FX long and short positions to 10% of the regulatory capital (the decision is entering into effect on Jan 20th and will remain in force until the end of 1Q20). According to the central bank’s estimations, this action will contribute to expansion of banks’ transactions by roughly USD400mn.
For the record, this month the NBU has already purchased in the FX market USD198mn and sold USD30mn. Net purchase in 2019 was USD7.9bn.

Company: UkrSibbank

Full company namePJSC "UkrSibbank"
Country of riskUkraine
Country of registrationUkraine
IndustryBanks

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