The Ukrainian currency has declined by 2% against the U.S. dollar since our previous report (Feb 19) and approached a support level at 25 figure. The currency pair remains under pressure since last week, reflecting spreading concerns over a possible impact of the coronavirus outbreak on the global economic growth and uncertainty surrounding dismissal of the local government.
As far as former is concerned, it is widely expected that the virus will lead to a pullback in global demand for commodities, undermining prospects for Ukrainian external sales. The situation is also complicated with a high uncertainty how large and persistent the economic impact of coronavirus will be. Foreign financial inflows are also at stake as risk-tolerance among investors declined notalby. Last primary debt auctions with low foreigners’ participation confirm the case.