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The withdrawal of dividends by foreigners affects the exchange rate
The US currency continues to rise steadily in Ukraine. On October 29, its rate on the interbank market rose 4 kopecks and the price ended in the range of 28.44-28.45 UAH / $.
In the morning, the dollar cash exchange rate added an average of 5-7 kopecks, but after lunch it came back. As a result, at night, the average prices were established in the following corridor:
- up to UAH 28.50-28.60 / $ – on sale;
- up to 28.20-28.40 UAH / $ – for purchase.
Banks said ordinary buyers and small businesses were actively buying US currency for cash during the day, but at night demand gradually fell.
For the third day in a row, foreigners bought the dollar in the interbank market: the volume of non-monetary operations increased from $ 152 million to $ 179 million. During the day, prices reached 28.46-28.4650 UAH / $, but at night there was a slight correction due to sales in dollars of the gold and foreign exchange reserves of the National Bank. …
“Foreigners are buying currencies, these are dividends. But the regulator is doing everything possible to meet this demand and support the hryvnia. Today, the NBU was selling the dollar again,” financial analyst Vasily Nevmerzhitsky told Strana.
According to various estimates, in the last three days, non-residents have bought between 180 and 200 million dollars in the interbank market.
The National Bank has been putting out fires all this time. And today he changed his tactic a bit at the auction. I did not post a quote to sell the dollar in the morning, but instead went to the interbank market amid a spontaneous surge in demand for foreign exchange: as soon as Citibank announced a big buy and set the price at 28.4650 UAH / $, the NBU sold the “American” first for all current orders. (“flooded the interbank”) at current rates. And then you just set the rate of UAH 28.45 / $ and actively sold currencies.
Treasurers have evaluated the regulator’s transaction volume differently. Some reported the sale of $ 50 million by the National Bank, others up to $ 60 million.
“It was a glorious battle. The NBU tried to repel the UAH 28.45 / $ attack, but the demand is high. The situation with the Constitutional Court, I think, is starting to put pressure on market sentiment more than one could. Imagine. There is so much pressure from non-residents who are trying to pull out and close positions in light of the quarantine in Europe and the upcoming elections in the US Someone is leaving in the context of all the uncertainty in cash. The market is experiencing strong pressure and nervousness “, – commented in the” Strana “the mood of the head of the analysis department of the Forex Club Group, Andrey Shevchishin.
In total, experts have identified five factors that influence sentiment in the forex market:
- Planned withdrawal of dividends by foreigners.
- Strengthening of the coronavirus quarantine in Europe, as a result of which companies are withdrawing capital from emerging markets.
- Deterioration of relations between Ukraine and the West in the context of the decision of the Constitutional Court on electronic declaration.
- Refund by the State Treasury of a large amount of VAT: after yesterday’s transfer to companies of 5.6 billion UAH (today, only 55 million UAH), the total amount of payments approached 9 billion UAH UAH.
- Messages from Ukrainian agricultural companies about a temporary suspension of wheat exports in anticipation of a maximum price. Consequently, foreign exchange earnings will stop flowing.
Non-residents now play an important role in our interbank market, and only a regulator that meets the demand of foreigners can resist them. NAK Naftogaz, which previously also acted as a major forex seller, adopted a wait-and-see attitude.
“Now it all depends on the National Bank and how it will maintain or release the rate. Sellers are quickly taken out of service, demand is great,” Shevchishin said.
After the end of the active phase of trading on the interbank market, a new rumor about the imminent completion of purchases by non-residents was actively dispersed today. They said that foreigners had finished their main purchases of the dollar and would stop grabbing it tomorrow. That is, the “American” should start to drop in price if the NBU supports this trend.
Whether this is true or gossip was spread among treasurers to trigger the banks’ foreign exchange sales is not known for sure. Everything will be clarified in the first hours of interbank trading tomorrow morning.
Bankers predict the opening of non-cash operations on October 30 in the range of 28.44-28.46 UAH / $. Most expect a market correction of 28.40 UAH / $, although there are those who believe in the movement of prices at 28.50 UAH / $.
Europe covers Covid-19, along with the euro
The collapse of the euro exchange rate continues on the world market. On October 29, it tumbled from $ 1.1756 / € to $ 1.1662 / € after the exchanges traded in the $ 1.1657-1.1759 / € range for the day.
The European currency came under pressure from news about the EU authorities’ struggle with the new wave of coronavirus: Investors fear that the new measures will exacerbate the economic slowdown in the Old World. In France, they announced the introduction of a self-isolation regime from October 30 to December 1, and in Germany, a limited quarantine will be launched from November 2.
In this context, nobody paid attention to the positive report from Germany on the decrease in unemployment from 6.3% to 6.2%. In addition, analysts admitted the preservation of the old negative indicator. The market did not react to the final meeting of the European Central Bank, which decided to maintain the zero base rate.
With the spread of Covid-19 in Europe, investors decided to ditch the euro and sit on the dollar. The US currency is considered a safer asset even in the face of the US presidential election. Interest in the dollar was also supported by a new economic report from the Department of Commerce, which spoke of a record growth of GDP in the United States in the third quarter of 2020, immediately by 33.1% on an annualized basis.
In Ukraine, the euro cash exchange rate dropped today by an average of 5 to 10 kopecks:
- up to 33.55-33.70 UAH / € – for sale
- up to 33.10-33.20 UAH / € – for purchase.
