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For 5 days, the “American” lost 30 kopecks, and the hryvnia has seriously strengthened. Photo: Country
The week of foreign exchange in the interbank market ended with a new collapse of the dollar, it broke the psychological level of UAH 28.0 / $: on December 11, its rate fell another 9 kopecks, to 27.95-27.97 UAH / $. For 5 days, the “American” lost 30 kopecks, and the hryvnia has seriously strengthened.
At the box office, it was also cheaper. On sale, the average cash rate fell by 12 kopecks, and on exchange, by 10. As a result, prices were in the following ranges:
- UAH 28.15-28.33 / $ – on sale;
- 27.80-28.0 UAH / $ – for purchase.
There was no demand for a dollar in cash, people mainly sell currency.
Debts determine the course
There was a real boom in the interbank market, which is not typical on Friday. Trading volume doubled – the number of transactions at Bloomberg jumped from $ 94 million to $ 218 million.
The National Bank entered the auction for the second time in a week, which, according to the treasurers’ calculations, acquired up to $ 70 million. It was no longer protecting the UAH 28.0 / $ level, but bought currency below – there were two rates:
- 27,955 UAH / $;
- 27,950 UAH / $.
“The strength was with the sellers. And only the NBU remained the main buyer, as the analysts expected. The news of the additional placement of Eurobonds by Ukraine only strengthened the positions of the sellers,” commented Andrey Shevchishin, head of the Forex Club analysis department, on the situation in the Strana auction.
Today information has been leaked to the media that the Ministry of Finance is organizing a road show on the additional placement of Eurobonds for 500 million dollars. Initially, in March, Ukraine placed its Eurobonds for 2 billion dollars at 7.25% per annum, and now it wants to add another 500 million to this amount. They say there is a hope of borrowing money cheaper, at 6.4% per year. In the context of the issuance of the dollar, which the United States Federal Reserve has activated after the start of the coronavirus pandemic, the credit resource in dollars in the world has fallen in price.
The government desperately needs additional resources to cover the budget deficit, which is projected at 150 billion UAH at the end of the year, as well as to pay off the state debt. Yesterday, December 10, the Ministry of Finance repaid government bonds in foreign currency for $ 376 million.
The Eurobond placement was the first news of the day. The second is the placement by the Ministry of Finance of national government bonds, scheduled for next Tuesday. It is because of him that the dollar was so actively sold on the interbank market today. According to the treasurers, the main sellers were foreigners, preparing to buy government bonds on December 15, and the rest of the players followed.
“Non-residents were actively selling foreign exchange under government bonds and alarmed the entire market. It became clear that the hryvnia would strengthen under pressure from foreigners. Therefore, exporters who had previously held the dollar also rushed to sell it. The demand for forwards had grown strongly. Furthermore, the dollar was taken on credit to sell at an even higher or lower rate. This makes sense, because short-term loans in dollars are not very expensive, around 3%. market is anticipating a significant strengthening of the hryvnia, “explained the situation to Strana’s financial analyst Vasyl Nevmerzhitsky.
Debt registry
On December 15, a large placement of government bonds is expected. The Ministry of Finance is actively negotiating with buyers of their debts, there are many disputes over rates. There are many rumors about it. But the treasurers say the government will be able to maintain a record placement of its bonds if it agrees with the buyers on the price. Also, a record for the whole of 2020 – about 28-30 billion UAH.
There are prerequisites for this. The Ministry of Finance today issued a very broad preliminary request for the number of new issues. Until 8 is planned for December 15. Officials have never published so many at once. An issue will be in dollars and 7 – in hryvnia: for 3, 6, 7, 12 months, as well as for 2,3 and 5 years.
Foreigners are expected to apply for long-term government bonds, mainly 5-year bonds. After all, there will be the highest rates, around 12% per year. Banks are expected to buy government bonds in the short and medium term.
It must be said that the banks have prepared to buy debt securities, today they have received the refinancing of the National Bank. Mainly long-term, for 5 years: the NBU provided 11 banks for this period of 11 billion UAH. And another 3-month loan to a financial institution for 87.9 million UAH.
Most of the funds received are expected to be spent on the purchase of government bonds.
Next week will be busy. On December 16, the Ministry of Finance will repay the government bonds of the old issue for a large amount – for UAH 11.8 billion: UAH 10.3 billion – rescue of government bonds and UAH 1.49 billion – interest (coupon). Sources from “Strana” said that most of this payment will go to state banks. No one doubts that they will help the Ministry of Finance, that is, they will reinvest the funds received for a new term in government bonds.
That is, the Ministry of Finance already has 10 billion UAH. In addition, banks will invest in government bonds additional funds from the refinancing of the national bank – about UAH 8-10 billion. In addition, foreigners will add their capital. It is waiting for non-residents to buy bonds worth between 5 and 8 billion UAH (they spent 1.8 billion UAH on government bonds last week). This is around $ 175-280 million.
What’s going to happen with the dollar?
That is why treasurers try to predict the outcome of negotiations between foreigners and the Ministry of Finance and the volume of sales of government bonds. The dollar sales volume in the interbank market and the exchange rate depend on this.
“And to be precise, the rate will depend on the National Bank, as the main buyer of the dollar. The closest support rate is UAH 27.9 / $. And then we will see what the volume of foreign exchange sales will be,” Andriy Shevchishin said. .
On Monday, December 14, the openness of the interbank market is forecast to decrease to 27.92-27.95 UAH / $. The additional movement of the exchange rate will depend on the appearance in the auction of the National Bank and its offer at the exchange rate in dollars.
“But it still seems to me that they will not want to lower the dollar exchange rate much. It hurts for exports. Although the prices of grains, minerals and metals are good, they can give way,” Shevchishin said.
Over the next week, financiers set different scenarios to strengthen the hryvnia:
- Optimistic: if the Ministry of Finance can organize a record placement of government bonds and attract foreigners: in this case, a collapse of the dollar exchange rate to 27.75-27.85 UAH / $ is allowed;
- Pessimistic – if foreigners do not agree with the Ministry of Finance on the price and buy few bonds: strengthening of the hryvnia in the region of 27.88-27.90 UAH / $.
The euro falls due to Brexit
The euro exchange rate on the world market fell from $ 1.2124 / € to $ 1.2113 / €, this happened after the oscillation between $ 1.2106-1.2163 / €.
Investors pulled out of the European currency amid rumors that the European Union may not have time to sign a Brexit trade deal with the UK by the end of 2020. UK Prime Minister Boris Johnson confirmed them. indirectly.
Sales of the euro and purchases of the dollar were also boosted by the report on the improvement of consumer sentiment in the United States, which said that the consumer sentiment of Americans increased from 76.9 points to 81.4, although expected this indicator to deteriorate to 76.5 points.
In Ukraine, the average exchange rate of the euro in cash fell 5 kopecks:
- up to 34.20-34.35 UAH / € – for sale;
- up to 33.70-33.85 UAH / € – for purchase.
