Page 44 - UKRRptOct20

(UAH8.2bn).
On Sept. 1, the Finance Ministry redeemed $1.69bn worth of Eurobonds issued in 2015​ and maturing this year. At the same time, the Ministry paid $400mn in interest payments on Eurobonds maturing in 2020-2027. Looking ahead, the Ministry said on its website: “By the end of the year, the balance of foreign currency payments on the state debt is about $1.6bn.”
In late August, the Finance Ministry borrowed $329mn from JPMorgan Chase & Co. at 7.75% to buy back about 10% of the $3.2bn worth Ukraine’s GDP-linked warrants ​issued as part of the 2015 debt restructuring. It is believed Ukraine bought the bonds back at 90% of par value.
7.0​ FX
The hryvnia will devalue to UAH29-30/$1 at the end of 2020, ​and by the end of 2021 it will be UAH29.50-30.50/$1, Head of Corporate Research at ICU investment group Oleksandr Martynenko has said.
"We expect that at the end of the year it will be the range of UAH29-30/$1. Next year, the gradual soft weakening of the hryvnia will continue," he said during an online presentation of the group's updated economic forecasts on Tuesday.
"We saw lively rhetoric about the exchange rate, about how, in the opinion of some analysts, observers and even members of the government, it should help implement the budget, support exporters, and accordingly, create serious negative expectations of further weakening of the hryvnia. And now they, in our opinion, continue to 'hang' as a certain burden on the exchange rate," Martynenko said.
This, as well as the expected growth of the current account deficit, will create pressure on the exchange rate, the expert said.
The weakening of the exchange rate in 2021 will contribute to the deterioration of Ukraine's trade positions. However, support for the exchange rate and the balance of payments will be provided by funds from international lenders and an inflow of investments, Martynenko said.
As for the current account, ICU has improved its forecast for 2020 to $6.2bn, or 4.2% of GDP.
As Martynenko said, the reduction in demand for imports, travel restrictions and a decrease in investment income payments were stronger than expected, but remittances were quite stable.
In 2021, the current account will return to a deficit of $3.7bn, or 2.4% of GDP, the ICU predicted.
Remittances from Ukrainians working abroad were down only 5.5% y/y through July​, compared to the first seven months of last year. Through July, Ukrainians sent home – through banks, money transfer companies and informal channels – almost $6.5bn dollars, according to the National Bank of Ukraine. Last year, remittances were made at the rate of $1bn a month.
44​ UKRAINE Country Report​ October 2020 ​ ​www.intellinews.com