The USD/UAH pair managed to find some support near the 25 region and has recovered to 24.5 level. Again, the central bank’s interventions in the currency market, it seems, were the major trendsetter, helping to stop a steady local currency devaluation, which began in late Dec.
FX injections by the NBU in last days of Jan, amounting to USD143mn, apparently have slashed a speculative demand, which intensified amid revitalized threats of hryvnia weakening, and drove back market forces to natural stance. The latter currently looks quite balanced.
The NBU this week has produced a summary of the last key policy rate discussion, where the central bank once again confirms its expectations of a short-lived effect on Ukraine after outbreak of the Chinese virus. The policymakers’ current estimates suggest a possible limited depressing of exports, such as metals, and temporal constrains in access to external financing.
As far as inflation and depending on it interest rates is concerned, the central bank pointed out a faster-than-expected abating of inflationary pressure, with energy prices still relatively low and the fruit and vegetable harvests projected to increase.
At the same time, the NBU admitted, that possible hryvnia’s weakening could prevent prices index from moving within the central bank’s inflation target band and could even reverse the trend.