Page 15 - Ukraine OUTLOOK 2025

ICU see several supporting disinflationary factors:
· an expected normalisation of harvest of grains, fruits and vegetables, as uniquely adverse weather conditions are unlikely to repeat next year.
· end of a two-year hiking cycle for household electricity tariffs. They were cumulatively increased by 178% (2.8x) since June 2023, and any further revisions are extremely unlikely.
· a moderation in household income, as salaries in the public sector are unlikely to grow significantly, and a higher military levy will eat a part of incomes.
· only a moderate weakening of hryvnia in 1H25, as we think a visible depreciation will be on the NBU agenda no sooner than 2H25.
• 2.2 FX
In the last week of November, the NBU allowed the hryvnia to weaken to a
new record low of UAH41.60 per $1, according to ICU.
The total foreign exchange deficit in the week rose due to increased demand on the interbank market. Net purchases for the four days of the week grew by 41% compared to the previous week, to $408mn. In return, the NBU increased interventions by only 20% to $709mn, allowing the hryvnia exchange rate to weaken to new record levels.
Ukraine’s National Bank (NBU) is poised to continue its policy of gradual hryvnia depreciation throughout 2025, with a more pronounced weakening anticipated in the second half of the year as inflationary pressures ease.
15 Ukraine OUTLOOK 202 www.intellinews.com