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The economy of not only Ukraine, but also other countries will be influenced by the success of the fight against the pandemic and vaccination.
In Ukraine, the dollar exchange rate rose from 24 hryvnia at the beginning of last year to 28 hryvnia due to panic related to the pandemic. Since then, the value of the hryvnia has fluctuated. The exchange rate of the hryvnia to the dollar in 2021 will be stable, said Finance Minister Sergei Marchenko. Correspondent.net collected expert opinions.
What about the course now?
On January 5, the National Bank of Ukraine reduced the exchange rate of the hryvnia by almost 16 kopecks against the dollar (28.5 hryvnia) and by 20 kopecks against the euro (34.9).
Thus, the official dollar exchange rate started 2021 with significant growth after falling at the end of last year. As for the euro, its rate rose to a nearly three-year high. The rate was highest only on January 30, 2018: 34.96 hryvnia per euro.
On the eve of Finance Minister Sergei Marchenko said that the growth of the dollar will not become a trend by 2021, so the hryvnia will remain stable.
“A strong devaluation or revaluation is already bad. A strong appreciation of the hryvnia makes the Ukrainian economy less competitive. We have set an average annual rate of 29.1 hryvnia so that we can be prepared to carry out all public spending in the case of various scenarios, “he said.
Marchenko stressed that the depreciation of the dollar has many side effects, so it is better that the hryvnia remains exactly stable. Fluctuations within a certain frame will not cause harm.
The finance minister urged paying less attention to exchangers, as “they should not deal with minor situational fluctuations.”
Recall that the hryvnia “entered” in 2020 at a rate of 23.69 to the dollar, and “came out” with a rate of 28.27 hryvnia. This is a drop of almost 20 percent against the dollar.
Investors are disappointed in Ukraine. What are the reasons
Basically, quarantine measures, the situation in world markets, negotiations with the International Monetary Fund, the resignation of the president of the National Bank, the sale of farmers and the desire of non-residents to invest in national government bonds (OVDP ) have influenced and continue to influence the rate.
Forecasts of the hryvnia against the dollar for 2021
Hryvnia exchange rate, short forecast:
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Oxford Economics analysts lowered their forecast for the hryvnia exchange rate to 28.4 hryvnia per dollar in 2021.
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In the 2021 budget, it is planned to bring the hryvnia to the level 29.1 hryvnia for the dollar.
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The IMF predicts that the Ukrainian hryvnia in 2021 will be at the level 28.12 hryvnia for the dollar.
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Experts in the consensus forecast of the Ministry of Economy agreed that the dollar will cost 28.6 hryvnia in 2021.
Analysts at Oxford Economics predict an average annual rate of 28.4 hryvnia per dollar in 2021.
Inflation could rise dramatically in early 2021 as demand recovers before production and companies will incur additional costs for the promised minimum wage increase, according to the report.
The experts also noted that the coronavirus pandemic, the war in Donbas, the lack of progress in relations with the IMF and the slow implementation of reforms will push the course.
The IMF predicts that the Ukrainian hryvnia in 2021 will be 28.12 hryvnia per dollar.
Main external risks for 2021:
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The appearance of other waves of pandemics in the world
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External financing gap
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Withdrawal of non-residents from government bonds
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Strengthening Hybrid Threats to Ukraine’s National Security
Among internal threats, experts point out:
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Significant growth of the state budget deficit
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High levels of corruption continue
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The fall of the hryvnia
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Rise in unemployment and inflation
In the first quarter of 2021, thanks to the return on investments of non-residents in national government loan bonds, the Ukrainian national currency has a chance to strengthen to 26.0-26.5 hryvnia per dollar, says Vadim Iosub, senior analyst at Alpari , citing Bank of America.
“According to the investment bank report, the main drivers of the inflow of money from non-residents are progress in the IMF program, as well as general optimism in the markets,” quotes an expert from Ukrinform.
BofA analysts believe nonresidents can restore their OVDP portfolio to $ 5 billion pre-crisis from $ 2.6 billion today, Yosub said. This capital inflow could be a key support for the hryvnia in 2021, analysts say.
Bank of America believes that the hryvnia is the most undervalued currency in the region, Yosub added.
Viktor Taran, trader-analyst at the Kiev branch of IABT, the dollar rate will continue to grow in 2021. This will be facilitated by the storage of tension in the Ukrainian economy, says the expert.
The strengthening of the dollar against other world currencies, in particular the Chinese yuan, will also have an impact. This can happen in the context of ongoing instability in trade relations between countries.
“We do not exclude that the dollar rate will exceed the 30 UAH mark in the first half of 2021,” says the expert.
The president of the investment group UNIVER Taras Kozak does not anticipate any significant fluctuation of the dollar.
It considers that the baseline scenario, which is the basis for the budget for 2021, may well become a reality. This will happen if there are no “hard” fluctuations in different directions in the political arena; therefore, GDP growth will reach three percent and the dollar rate will remain in the 28-29 hryvnia region.
A special “pessimistic” scenario includes the continuation of the coronavirus pandemic, the introduction of additional quarantine restrictions, as well as a sudden loss of support from Western countries.
“If they cannot find funds on the market, the question of printing money by the National Bank may arise. If it is in the amount of 50-100 billion hryvnia per year, then the rate will” float “- it will be from 30-32 hryvnia per dollar, “- the analyst quotes Comments …
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