Page 41 - UKRRptAug18

7.0 FX Source: CEIC
Exchange rate 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Official UAH/USD (eop) 7.7 7.99 7.96 7.99 7.99 7.99 15.77 23.41 26.20 27.52
Official UAH/USD (avg) 5.27 7.79 7.94 7.97 7.99 7.99 11.89 21.84 22.55 26.60
Of 11 former Soviet republics, Ukraine had the best performing currency and Russia had the worst performing currency during the first half of this year, Bloomberg reports. The three Baltic nations were excluded from the survey because they use the Euro. Although oil prices are high – around $78 a barrel – the Russian ruble has been hit by US sanctions, Bloomberg analyzes. Of the 11 currencies, the best performers against the dollar were: Ukrainian hryvnia - +7.14%, Georgian Lari - +6.1% Moldovan Leu - +1.69% and Kyrgyzstani Som - +1.41%.
Ukraine’s Economy Ministry expects the Ukrainian hryvnia exchange to fall to UAH30.7 per US dollar by the end of 2021 from the current UAH26.3, according to the ministry’s annual three-year economic forecast submitted to the Ukrainian government.
The ministry expects annual depreciation not to exceed 3.2% in 2019-2021, while the exchange rate at the end of 2018 is expected to be UAH28.10-28.50 per US dollar (vs. UAH26.23 per US dollar as of today), Interfax news agency reported on July 11.
With this exchange rate, Ukraine’s GDP is expected to be worth $125.7bn in 2018, $140.0bn in 2019, $149.9bn in 2020 and $163.6bn in 2021 (vs. $112.1bn in 2017). In real terms, Ukraine’s economic growth will accelerate from 3.0% y/y in 2019 to 4.1% y/y in 2021.
Evgeniya Akhtyrko at Kyiv-based brokerage Concorde Capital believes that the ministry’s forecast looks quite optimistic, assuming a new loan tranche from the International Monetary Fund (IMF) will be received, as well as other lending from IFIs, which in total should provide up to $3.3bn.
"State officials are still trying to reach an agreement on natural gas prices at import parity, which would require hiking them significantly, a widely unpopular move," she wrote in a research note on July 12. "Should the government fail in securing the IMF tranche, the ministry’s economic forecast will be quite irrelevant."
The ministry projects government borrowing at UAH215bn in 2018, which is 7% lower than the amount assumed by the state budget. The submitted forecast also assumes that natural gas prices for households will increase 18% in 2018.
41 UKRAINE Country Report August 2018 www.intellinews.com