Page 40 - UKRRptNov20

The prospects of Kyiv unlocking the aid are uncertain.
“Factoring in exaggerated devaluation expectations, domestic consumption recovery, expected worsening global conjuncture, unsupportive capital flows, and a surge in fiscal spending, we project the hryvnia to depreciate by the end of the year to 29-30/$1,” analysts from ICU brokerage said in written comments.
The median forecast of analysts polled by Reuters suggests annual inflation of 4.6% year-on-year by the end of 2020 from 2.5% in August, due to the weakening currency. Inflation is seen rising to 5.6% in 2021.
Last year, the hryvnia strengthened by 17% and the central bank boosted its currency reserves by almost $4.9bn thanks to foreign investments worth $4.7bn into Ukraine’s local bonds. The country also earned from its record volume in grain exports.
Foreign investors’ portfolio has shrunk by $1.7bn so far in 2020. The government expects that grain exports will fall 17% this season due to a lower harvest.
The central bank sold a net $200 million to prop up the hryvnia in September,​ the regulator reported on its website. This was the third largest amount of sales in the first nine months of this year. Diminished foreign investor interest in Ukrainian government bonds coupled with increased demand by Ukrainian importers “led to a slight weakening of the hryvnia against the [U.S.] dollar, said the National Bank of Ukraine.
Ukraine FX
Jan 2020
Feb 2020
Mar 2020
Apr 2020
May 2020
Jun 2020
Jul 2020
Aug 2020
Sept 2020
Oct 2020
Currency (units per EUR) (average)
26.78
26.84
29.34
29.54
29.16
30.03
31.32
32.55
33.03
33.35
Currency (units per USD) (average)
24.12
24.58
26.52
27.18
26.77
26.79
27.33
27.52
28.02
28.33
40​ UKRAINE Country Report​ November 2020 ​ ​www.intellinews.com