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Ukrainians now rent more dollars than they buy
The new month began with a rise in the price of the dollar: on December 1, the price of the dollar on the interbank market rose 2 kopecks, to 28.52-28.53 UAH / $. At the box office, prices went up a bit more, from 2 to 5 kopecks. After that, the average cash rates were:
• 28.63-28.72 UAH / $ – for sale;
• 28.30-28.50 UAH / $ – for purchase.
“People basically rent the dollar, they don’t buy. Probably the population is already preparing for the New Year holidays,” financial analyst Vasily Nevmerzhitsky commented on the “Strana” mood.
Foreigners are buying
In the interbank forex market, trading was in full swing. According to Bloomberg, the transaction volume increased from $ 132 million to $ 165 million. Foreigners who went out to buy dollars became more active again.
“Trading on the foreign exchange market was opened with quotes of 28.53-28.54 UAH / $. Strong demand from non-resident banks led to a rise in prices to 28.57-28.58 UAH / $ Sellers began to catch up on the market with these values and in the afternoon the dollar returned to opening levels – UAH 28.52-28.54 / $ “, – Yuriy Grinenko, treasurer, chief operating officer Credit Dnepr Bank’s interbank market trading, described the situation to Strana.
The market is waiting for new coronavirus restrictions from the government, and tomorrow.
“There is some nervousness due to the expectation of a lockdown. Also, everyone understands that the interbank market can reach 29 UAH / $, and this is also urgent,” admitted Vasyl Nevmerzhitsky.
Alfa-Bank stood out among currency buyers. They said he was buying a dollar for dividends, and it was rumored that he was doing it for Kyivstar. And Ukrgasbank was named a key seller of foreign exchange. The treasurers wondered what dollar he was selling (Naftogaz or other big customers), but they did not reach a common conclusion.
The National Bank was not noticed in the auction, it has been observing the interbank market from the side for the fourth consecutive week.
“The Ministry of Finance is afraid of panic”
The Ministry of Finance did not differ much today: it placed bonds of the internal state loan for a modest amount of UAH 2.7 billion.
This surprised many treasurers, given the public outcry that the news about the state budget deficit receives: in October it grew by more than 30 billion UAH and reached 112 billion UAH. At the same time, the State Treasury today reported on the balance of the single treasury account at UAH 19.75 billion, that is, 2.8 times less than last year’s figure: as of December 1, the account of the government was 53 billion UAH. And former Deputy Economy Minister Pavel Kukhta said that over the past week, the amount of unpaid budget obligations increased by more than UAH 5 billion and reached UAH 15 billion.
In this context, financiers predicted large loans from the Ministry of Finance, but the indicators were more than modest:
• 4-month government bonds were placed for 1.96 billion UAH;
• 11-month government bonds: 531.6 million UAH;
• 3-year government bonds: 171.7 million UAH.
“Officials are gradually raising their interest rates to attract more, but they try to do so slowly, and only at times of large government bond redemptions. So there is an obvious explanation for large government bond issues: they say that we are borrowing a lot to pay off old securities. The Ministry of Finance is afraid to raise rates and place bonds for a large amount (through manual state banks) so as not to cause panic. After all, this will officially confirm serious problems with the budget deficit. The government is afraid of panic and a negative image. Perhaps to keep a good face in front of the IMF or the European Union. This is more important to them, than debts on budget payments “, – the vice president of the board of one of the banks commented to “Strana” about the situation.
New currency rules
Even in the financial market, there was an active rumor that the National Bank was preparing to change the exchange rules, or rather to simplify the exchange requirements.
“People, that is, ordinary Ukrainians, can be allowed to enter into currency forward contracts, which is now only allowed for companies. This will give people the opportunity to receive higher interest rates on deposits. in foreign currency. And legal entities will be able to buy foreign currency without contracts for foreign economic activity. But withdraw the dollar or the euro. It will not be possible without contracts, since transfers, as before, will only be made through foreign exchange control “Vasily Nevmerzhitsky said.
This means that companies that do not have import contracts and are now unable to buy foreign currency on the interbank market will receive this official right. But they will only be able to use it to save money, meaning they will be able to keep cash in their accounts. But they will not be allowed to withdraw currency or transfer it inappropriately. Currency control and financial monitoring will continue to function.
“The company’s management will expand investment opportunities. It will be able to invest the free hryvnia not only in goods, deposits or government bonds. It will also be able to invest it in foreign currency, waiting for a rise in the exchange rate. But it will only allow spending this currency (use it) if there is an appropriate contract. If it does not exist, then the only application is the reverse exchange “, – explained Nevmerzhitsky.
The forward currency contract, which will be offered to individuals, will be designed primarily for depositors. Those who want to be guaranteed to stay in dollars or euros, but receive the same interest rate as on the hryvnia deposit. In this case, when concluding a forward, a person will change the currency to the hryvnia, but with the mandatory guarantee to buy back the dollar or the euro at a fixed rate in the future.
The formula works like this: a person today exchanges his dollar at the current rate, at 28.52 UAH / $, and invests the hryvnia received in a hryvnia deposit for 12 months. Therefore, you do not receive between 1 and 1.5% per year (as for a dollar investment), but between 8 and 10% per year (as for a hryvnia). And when the term of the deposit and the forward contract expires, that is, after 12 months, the bank changes the hryvnia of the deposit to the US currency at the same rate – 28.52 UAH / $. That is, the individual loses nothing, returns his dollar, and receives a more substantial amount of interest.
Both new rules are expected to be approved by the Board of Banco Nacional in early 2021.
What will happen to the dollar due to the lockdown?
For the short term, financiers give different forecasts. Almost everyone is tied to the expected closure.
“If there is no redemption of the dollar against dividends, then perhaps we will test the level of UAH 28.5 / $ from above, and then go up slightly. I think we will stay in the zone of UAH 28.5-28.6 / $. But now a lot depends on foreigners, “Andrey Shevchishin, head of Forex Club’s analytics department, said in an interview with Strana.
At the same time, in the case of the introduction of new restrictions on COVID-19, financiers allow a more active accumulation of the dollar exchange rate in the interbank market.
“If new restrictions or a complete lockdown are introduced, this can add volatility to the interbank forex market. There can be a bit of confusion: someone will try to sell the currency as soon as possible, and someone will want to quickly close the year and go on a New Year holiday. New. But global problems in relation to I do not foresee this, “said Grinenko.
The euro has reached a new level
The euro exchange rate rises to new heights on the world market. On December 1, it took a psychological tick: it jumped from $ 1.1956 / € to $ 1.2046 / € after swinging in the range of $ 1.1927-1.2054 / €.
Traders were bribed by positive macroeconomic reports from the European Union, so they bought their currency. The following indicators are intended to:
- According to the final estimate, the business activity index (PMI) in industrial production in 19 euro zone countries fell from 54.8 points to 53.8 points in November. While analysts feared a more significant collapse – to 53.6 points.
- Unemployment in Germany last month unexpectedly fell from 6.2% to 6.1%. What was considered a positive development.
At the same time, investors eagerly await tomorrow’s speech from US Federal Reserve Chairman Jerome Powell and Treasury Secretary Stephen Mnuchin. In November, Mnuchin asked the Fed to return $ 455 billion unspent from credit programs as part of the Cares Act financial aid package. The financial community is awaiting comment on this matter. It is feared that the state aid program will be reduced.
“It will be interesting to see what the two officials have to say about this and if Powell hints at other ways to stimulate the US economy,” Haralambos Pisouros, a senior market analyst at JFD Group, told Reuters.
A new economic stimulus for the US is expected from the Fed. Tomorrow’s dollar / euro exchange rate will depend on the forecasts of officials in this regard.
On December 1, the Ukrainian euro cash rate changed only because of the repurchase of the stock: it increased by 10 kopecks and remained for sale in the old corridor. Average prices have been consolidated in the following ranges
• 34.20-34.40 UAH / € – for sale;
• 33.75-33.90 UAH / € – per purchase.
