Why is the hryvnia not falling against the dollar and euro?
After the start of the war in 2022, the exchange rate of the Ukrainian hryvnia rushed down; if before the start of hostilities, one US dollar was worth 28 hryvnia, then after a couple of months, 1 dollar began to cost 37 hryvnia.
It would seem that everything is logical; a war on the territory of a country never adds stability to the national currency.
But strange things began later; for a year and a half now, the hryvnia has not fallen below the level of 40 hryvnia per 1 US dollar. Why is there no further decline, despite the problems in the Ukrainian economy?
In fact, the answer to this question is quite simple: the hryvnia exchange rate remains at the current level thanks to the efforts of the national bank.
The first year there were restrictions on the purchase of foreign currency imposed by the NBU; it was practically impossible to buy dollars or euros through a bank.
The third factor that favorably influences the hryvnia exchange rate is the regular influx of foreign currency into Ukraine's foreign exchange market. The National Bank consistently sells billions of dollars and euros on the interbank foreign exchange market.
According to the online publication Korrespondent , in the first three months of 2024 alone, the NBU sold 5.9 billion US dollars. This means that nearly 2 billion US dollars are being dumped onto the market every month.
It is precisely this monetary policy that allows the national currency exchange rate to be maintained within the range of 40 hryvnia per dollar for a long time.
What will be the hryvnia exchange rate in 2024?
Let's start with the fact that the average dollar exchange rate in the 2024 Ukrainian state budget is set at 40.7 hryvnias.
Since the dollar exchange rate was only 38 at the beginning of 2024, there is a high probability that by the end of the year it will rise to 42 hryvnias per dollar.
In addition, there has been a trend towards reducing the NBU's interest rate, which has now been reduced to 15% per annum.
The main factor influencing the foreign exchange market is the government's availability of dollars for sale on the interbank market. Currently, demand is between 2 and 2.5 billion dollars per month.
For now, the foreign exchange income situation is more or less stable, but no one can guarantee that it won't change in the coming months. Furthermore, a surge in demand could arise at any moment, pushing the dollar above 40 hryvnias.
Ultimately, it can be said that in 2024 the hryvnia will fall and, with a high probability, its exchange rate against the US dollar will exceed not only 40, but also 45 hryvnia per US dollar.
