The population has lost interest in accumulating foreign currency. In April, individuals took advantage of the overheated currency market, with the cash dollar reaching 13 hryvnias, and decided to make money from the currency exchange rate. They sold to banks 259 million dollars more than purchased from them. However, bankers consider that this situation won’t last long and expect a spike in demand amid the escalation of military unrest in the east of the country.
Рeople sell foreign currency
In April, general public took advantage of the opportunity to make some money on the exchange rate. Over the month, they sold to banks 259 million dollars more than they bought, the NBU calculated. It is a unique situation, as before that people use to buy more than sold. In March, the net demand of Ukrainians for the currency was 358 million dollars, 783 million in February, while in January – 659 million.
The change in the strategy applied by the population in April looks justified, because just over a month the official dollar rate versus hryvnia grew by 44 kopecks; whereas, the euro rate, by 69 kopecks. The horserace on the cash market was even more significant.
The turnover also dropped: according to the NBU, the volume of cash foreign currency operations was 1.1 billion dollars. In fact, the excess in the currency market formed because the volume of the demand for cash currency dropped far more significantly (427.1 million) than the supply (686.2 million).
The bankers believe that the reduction in the demand was facilitated by the measures taken by the regulator and too high currency exchange rate. “To stabilise the situation with the outflow of deposits and currency exchange operations, the National Bank applied a number of legislative measures, which this way or another were aimed at smoothing the “distortions” and maintaining the demand and supply balance in the cash and non-cash interbank currency market. These measures altogether were efficient and produced the result. The turnover in the cash market was considerably less than before,” Anton Stadnik, Head of Investment Business Department at FUIB, marks.
The bankers say that at present the rate is impacted by too many factors, this is why, it is rather difficult to foresee the demand of individuals for currency in May and further on.
Demand will return
However, the market participants think that absence of the demand will not last long, as in the mid-term the currency rate is likely to start declining, attracting the attention of people to the currency.
At the same time, many of whose wishing to take advantage of the currency rate did it earlier, this is why in the near future the bankers do not expect the currency sale to be significant.
“When the interbank market was reaching its historic maximums of over 13.8 hryvnias/dollar and approaching 14 hryvnias/dollar, actually there were speculative behaviours on the part of individuals, who were selling currency with the hope to purchase it cheaper in the future, and, as it turned out, they proved to be right,” Anton Standik comments.
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