Financial experts know that in autumn the demand for foreign currency usually increases in Ukraine. The period of vacations is over and people return to their savings, and at the same time business activity wakes, including contracts which require payments in foreign currency.
However, this autumn the trend is not so obvious, comparing to the last year. According to the NBU data, the net purchases (excess of supply over demand) of foreign currency in October made $216 million, which is three times less than in September. At the same time, the demand for dollars has not weakened the average weighted spot rate of hryvnia, which fluctuated within 1% (8.1329 -8.2079 UAH/$) for the period of August 16 - November 12. Moreover, for 10 months of this year the net demand for foreign currency has decreased by seven times (to $1.2 billion) comparing to the January-October period of 2012.
Head of the analytical department of "Alfa-bank" Oleksiy Blynov states that this autumn exchange rate movements are very insignificant comparing to the last year. According to the expert's forecast, this trend will continue till the yearend. "The National Bank carries out a policy on support of hryvnia's rate, and it copes with it rather well." Moreover, the payments to IMF for this year have been accomplished, and the next year the country must pay $6.1 billion, which is 20% less than in 2013 - it diminishes the pressure on hryvnia as well.
Analysts specify that these months dealers have tried to stir up the market and provoke a speculative demand for foreign currency using information attacks and forecasting defaults, but failed.
Quiet autumn
Financial expert Borys Kushniruk notes that the ongoing policy of NBU on hryvnia support has changed the interbank market, stabilizing it and creating conditions for active supply of foreign currency (not demand for it). Indeed, speaking about the average daily rates of the foreign currency interbank market for autumn of 2012, the net daily demand ranged between 60 and 70 million dollars. When in December the NBU introduced obligatory sale of 50% of currency earnings by exporters, the daily demand dropped to $20 million. In 2013, the net interbank demand not only has disappeared, but transformed into net supply. Thus, in June-August the average daily net supply of foreign currency ranged between $2 million and $44 million, and in October - at the level of $19 million. The ban on advertising goods with prices in dollars begins to tell as well.
Director of the market analysis and forecast department of NBU Serhiy Korablyn underlines that the market has been working under self-regulation recently, and participation of the regulator has reduced to less than 1% of total amount of operations. "The reduction of the demand for foreign currency has been encouraged by low inflation, weak devaluation expectations and stability of hryvnia," he adds.
Moreover, according to him, the interest to foreign currency has weakened due to the ban on currency crediting of individuals. "Bank credit liabilities in foreign currency have reduced for the past five years. For example, in October of 2008 household credit liabilities in foreign currency made $26.7 billion, but in October of 2013 this sum was down by three times. Thus, considering that people pay less interest on loans, the demand for currency falls."
In turn, expert of the information analysis center of the FOREX CLUB in Ukraine Maria Salnikova points out general decline of confidence in dollar. "The majority of the population prefers to keep savings in hryvnia, and the reasons for this are plenty, including hryvnia's stable rate and regular financial problems in the US, which make Ukrainians and the whole world in general to be cautious. Do not forget the NBU measures on dedollarization of economy. And finally, hryvnia deposits offer better rates," the economist specifies.
Deposit effects
Confidence in national currency and growing confidence in the banking system have resulted in the growth of the aggregate deposit portfolio. Thus, for nine months of 2013 the amount of individual deposits in Ukraine have grown by 16.2% (by 59.25 billion hryvnias), the NBU reports.
In particular, the amount of hryvnia deposits has grown by 54.76 billion hryvnias (+29.8%) to UAH 238.54 billion, while the amount of individual deposits in foreign currency has grown only by 4.49 billion hryvnias (+2.5%) to UAH 186.56 billion. In this respect, director of the NBU department on currency reserves Oleksandr Dubikhvost notes that the current dynamics significantly differs from the results for the similar period of 2012, when foreign currency deposits grew by 21.87 billion hryvnias (+14.6%), and hryvnia deposits - by UAH 19.52 billion only (+12.4%).
"Depositors begin to understand that hysterical forecasts of pseudo-analysts and provocations in the press are not the only sources of information to rely on and that stability in rate and real profit from hryvnia deposits must also be taken into account," he says and adds that the NBU will continue taking measures on dedollarization of economy to weaken the role of foreign currency in the financial system of the country.
Down with fears
The growth of hryvnia's market weight also begins to tell on crediting. Thus, as of November 1, hryvnia credit portfolio of banks enlarged by UAH 50.4 billion since the year beginning (to 560.2 bln), while credit portfolio in foreign currency grew by 7.9 billion hryvnias only (to UAH 307.4 bln). Hence, hryvnia credits come well ahead of currency by both the rate of growth and absolute amount.
However, not everyone is happy with this positive trend, including currency dealers and ... IMF. Thus, the International Monetary Fund has repeated recently its recommendations on more flexible exchange rate of hryvnia. In turn, Kushniruk notes that the policy of economy dedollarization largely relies on export, and loose exchange rate may cause financial destabilization. "In my opinion the recommendations of the IMF proceed directly from its own goals and interests, namely fast credit recovery, while Ukraine's economy is not among the Fund's priorities. At the same time, Kyiv's position must be quite opposite, meaning directed to national interests, which it is in large part," the specialist comments.
Summing up we want to note that both regular Ukrainians and financial experts no longer believe these hysterical forecasts about hryvnia's collapse. Regular market forecast is one thing, but commercial interests of certain groups, which want to take advantage of destabilized situation, are a different matter. One groups want simply to make money out of rates of exchanges, while others try to destabilize the financial market for certain geopolitical purposes. However, the one thing they have in common is profound indifference to country's national interests, thus there is not reason to yield to these provocations.
Andriy Boyarunets
However, this autumn the trend is not so obvious, comparing to the last year. According to the NBU data, the net purchases (excess of supply over demand) of foreign currency in October made $216 million, which is three times less than in September. At the same time, the demand for dollars has not weakened the average weighted spot rate of hryvnia, which fluctuated within 1% (8.1329 -8.2079 UAH/$) for the period of August 16 - November 12. Moreover, for 10 months of this year the net demand for foreign currency has decreased by seven times (to $1.2 billion) comparing to the January-October period of 2012.
Head of the analytical department of "Alfa-bank" Oleksiy Blynov states that this autumn exchange rate movements are very insignificant comparing to the last year. According to the expert's forecast, this trend will continue till the yearend. "The National Bank carries out a policy on support of hryvnia's rate, and it copes with it rather well." Moreover, the payments to IMF for this year have been accomplished, and the next year the country must pay $6.1 billion, which is 20% less than in 2013 - it diminishes the pressure on hryvnia as well.
Analysts specify that these months dealers have tried to stir up the market and provoke a speculative demand for foreign currency using information attacks and forecasting defaults, but failed.
Quiet autumn
Financial expert Borys Kushniruk notes that the ongoing policy of NBU on hryvnia support has changed the interbank market, stabilizing it and creating conditions for active supply of foreign currency (not demand for it). Indeed, speaking about the average daily rates of the foreign currency interbank market for autumn of 2012, the net daily demand ranged between 60 and 70 million dollars. When in December the NBU introduced obligatory sale of 50% of currency earnings by exporters, the daily demand dropped to $20 million. In 2013, the net interbank demand not only has disappeared, but transformed into net supply. Thus, in June-August the average daily net supply of foreign currency ranged between $2 million and $44 million, and in October - at the level of $19 million. The ban on advertising goods with prices in dollars begins to tell as well.
Director of the market analysis and forecast department of NBU Serhiy Korablyn underlines that the market has been working under self-regulation recently, and participation of the regulator has reduced to less than 1% of total amount of operations. "The reduction of the demand for foreign currency has been encouraged by low inflation, weak devaluation expectations and stability of hryvnia," he adds.
Moreover, according to him, the interest to foreign currency has weakened due to the ban on currency crediting of individuals. "Bank credit liabilities in foreign currency have reduced for the past five years. For example, in October of 2008 household credit liabilities in foreign currency made $26.7 billion, but in October of 2013 this sum was down by three times. Thus, considering that people pay less interest on loans, the demand for currency falls."
In turn, expert of the information analysis center of the FOREX CLUB in Ukraine Maria Salnikova points out general decline of confidence in dollar. "The majority of the population prefers to keep savings in hryvnia, and the reasons for this are plenty, including hryvnia's stable rate and regular financial problems in the US, which make Ukrainians and the whole world in general to be cautious. Do not forget the NBU measures on dedollarization of economy. And finally, hryvnia deposits offer better rates," the economist specifies.
Deposit effects
Confidence in national currency and growing confidence in the banking system have resulted in the growth of the aggregate deposit portfolio. Thus, for nine months of 2013 the amount of individual deposits in Ukraine have grown by 16.2% (by 59.25 billion hryvnias), the NBU reports.
In particular, the amount of hryvnia deposits has grown by 54.76 billion hryvnias (+29.8%) to UAH 238.54 billion, while the amount of individual deposits in foreign currency has grown only by 4.49 billion hryvnias (+2.5%) to UAH 186.56 billion. In this respect, director of the NBU department on currency reserves Oleksandr Dubikhvost notes that the current dynamics significantly differs from the results for the similar period of 2012, when foreign currency deposits grew by 21.87 billion hryvnias (+14.6%), and hryvnia deposits - by UAH 19.52 billion only (+12.4%).
"Depositors begin to understand that hysterical forecasts of pseudo-analysts and provocations in the press are not the only sources of information to rely on and that stability in rate and real profit from hryvnia deposits must also be taken into account," he says and adds that the NBU will continue taking measures on dedollarization of economy to weaken the role of foreign currency in the financial system of the country.
Down with fears
The growth of hryvnia's market weight also begins to tell on crediting. Thus, as of November 1, hryvnia credit portfolio of banks enlarged by UAH 50.4 billion since the year beginning (to 560.2 bln), while credit portfolio in foreign currency grew by 7.9 billion hryvnias only (to UAH 307.4 bln). Hence, hryvnia credits come well ahead of currency by both the rate of growth and absolute amount.
However, not everyone is happy with this positive trend, including currency dealers and ... IMF. Thus, the International Monetary Fund has repeated recently its recommendations on more flexible exchange rate of hryvnia. In turn, Kushniruk notes that the policy of economy dedollarization largely relies on export, and loose exchange rate may cause financial destabilization. "In my opinion the recommendations of the IMF proceed directly from its own goals and interests, namely fast credit recovery, while Ukraine's economy is not among the Fund's priorities. At the same time, Kyiv's position must be quite opposite, meaning directed to national interests, which it is in large part," the specialist comments.
Summing up we want to note that both regular Ukrainians and financial experts no longer believe these hysterical forecasts about hryvnia's collapse. Regular market forecast is one thing, but commercial interests of certain groups, which want to take advantage of destabilized situation, are a different matter. One groups want simply to make money out of rates of exchanges, while others try to destabilize the financial market for certain geopolitical purposes. However, the one thing they have in common is profound indifference to country's national interests, thus there is not reason to yield to these provocations.
Andriy Boyarunets
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