Why the stronger hryvnia – explains the head of the NBU Council

Почему укрепляется гривня - объясняет глава Совета НБУ

The main reasons for the strengthening of the hryvnia and the fall in foreign exchange rates is the Federal reserve not to raise the key rate and the fall in world energy prices.

This was written by the head of the Council of the National Bank Bogdan Danilishin on his page in Facebook.

According to him, the strengthening of the hryvnia will last a maximum in may-June.

“The impact on the realities and perspectives of all currencies in the world, including the hryvnia, making the fed’s policy – it is an axiom. That the leadership of the fed has doubts as to whether to continue the tight monetary policy became known in the early days of the year,” said Danylyshyn.

According to the head of the NBU Council, the “pause” in raising rates, the fed will last until about June, which will create favorable conditions for the Ukrainian currency.

In addition, the hryvnia exchange rate was affected by the fall in world energy prices, which constitute a significant part of Ukrainian imports.

“It seems we have entered a period of relatively low oil prices and other energy resources, among which are important for Ukraine, along with the “black gold”, is natural gas. Reducing the cost of energy associated with excess supply in the global market”, – noted he.

In addition, the strengthening of the hryvnia was driven by several internal factors: growth of exports of agricultural products and metallurgy, the growth of receipts from the sale of the Ukrainian debt securities and reasonable costs of the state budget in early 2019.

“Active exports of Ukrainian agricultural products will be in March-April, may-it will be a temporary (few months) decline. And investments of nonresidents in government bonds – not long: in the summer of foreign investors, waiting for the redemption of debt securities likely to withdraw from the Ukrainian market, thereby increasing demand for foreign currency”, – wrote he.


In late January the Federal reserve has signaled the completion time of higher interest rates and a willingness to be flexible in reducing their investments in bonds.

On 15 January, the Finance Ministry planned the auction on placement of t-bills attracted to the state budget of 9.7 billion UAH.

January 22, the Ministry of Finance attracted to the state budget 13,569 billion hryvnia.

The situation on the market of domestic bonds Treasury bonds beginning in 2018, when the resident is actively buying the country’s debt, is repeated in the beginning of 2019.

In 2018 the national Bank with concern belonged to the active capital inflows of non-residents.

Due to the non-resident interest of hryvnia bonds has increased the supply of currency in the interbank market, which led to the strengthening of the hryvnia.

Почему укрепляется гривня - объясняет глава Совета НБУ