NBU explains hryvnia devaluation in March

In March, the hryvnia exchange rate fluctuated in both directions, depreciating moderately by the end of the month due to a number of factors, forcing the National Bank to increase its foreign currency sales to $1.8 billion. This was reported by the NBU in its macroeconomic and monetary review for April, UNN reports.  

Details

"The situation in the foreign exchange market remained controlled, and exchange rate fluctuations were moderate," the NBU said.

According to the NBU, "during March, the hryvnia exchange rate fluctuated in both directions, depreciating moderately by the end of the month due to a certain deterioration in the balance of supply and demand in the market in the second half of March." As noted, this was due to:

• the revival of spring field work, which was accompanied by an increase in demand for foreign currency from importers of fertilizers and plant protection products
• Increased need for energy imports, including due to intensified shelling of the energy sector 
• intensification of budget expenditures with the receipt of significant amounts of international aid in the second half of the month 
• completion of the period for paying annual and quarterly taxes

"Under these conditions, the NBU increased its interventions in the sale of foreign currency (up to USD 1.8 billion)," the regulator said.

The NBU also indicated that it has resumed the cycle of rate cuts, while yields on hryvnia assets are reportedly still positive in real terms.