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Ukrsibbank Research: FX and interest rates: USD/UAH rate drifts North on aggressive NBU’s FX interventions

January 23, 2020 | Cbonds

The Ukrainian Hryvnia was whittled approximately 1% lower over the last seven days, closing today’s trade session near 24.4 mark. Despite expanding non-residents’ participation in the public debt and another FinMin’s success in cutting yields for the UAH-denominated government bonds (see results of the debt auction on 21 Jan), the local currency continuously fails to capitalize these factors as the central bank presses ahead with its aggressive mopping-up of incoming correspondent FX liquidity. In total, the NBU’s net interventions in the interbank exchange market during the last week accounted for USD100mn compared to USD118mn a week before.
Under such circumstances, the current USD/UAH pair dynamic has mostly to do with trade balance forces, and in this front, we see exporters have tempered FX revenues sales after replenishing their UAH liquidity stocks for business needs with VAT refunding, disbursed a week ago. This resulted in a modest downside trending of the pair, in spite of no material change in demand for foreign currency.
Worth also mentioning, that the FinMin today (on 22 Jan) has announced the issue of new 10-year eurobonds pegged to euros. According to the media, the book-building process will start shortly, but the new issue has already been priced with a yield of 4.75%. The new bonds might stimulate for a while a fresh inflow of foreign investments into local government bonds.

Company: UkrSibbank

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


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