NBU states controlled situation in FX market, sufficiency of reserves, sells $2.1 bln since year start

The National Bank of Ukraine (NBU) continues to smooth out excessive exchange rate fluctuations through active interventions in the sale of foreign currency while maintaining a flexible exchange rate regime, the situation in the foreign exchange market remains under control, the NBU said in a statement on Thursday evening.

"In general, since the beginning of the year, the National Bank has sold $2.1 billion. Ukraine has a sufficient amount of international reserves – about $ 28 billion," the document says.

The NBU recalled that in March 2020 it was forced to sell almost $2.3 billion in a month to calm the rush demand in the market that arose against the backdrop of the coronavirus crisis, and then its reserves amounted to $26.3 billion.

The regulator explains the excess of demand for the foreign currency over its supply and the weakening of the hryvnia by "significant tension in the information space due to the aggressive policy of Russia" and a psychological factor that cannot last long.

At the same time, the NBU emphasizes that the international community has already announced large-scale financial assistance packages to Ukraine. "Consequently, the volume of international reserves is and remains sufficient for the National Bank to continue to smooth out excessive market fluctuations, if necessary," the regulator explains.

In its opinion, today there are no macroeconomic reasons for the weakening of the hryvnia.

"The rejection of fixing the exchange rate and the transition to floating exchange rate formation have significantly increased the stability of the foreign exchange market against shocks," the NBU added.

He also said that the foreign currency balance in the banking system is at the proper level – about $1.2 billion (equivalent) compared to about $1 billion (equivalent) at the beginning of 2022. The National Bank pointed out that today, unlike March 2020, it has not received complaints from the population about the lack of cash in the cash desks of banks or non-bank exchange offices, therefore, there is no shortage of cash in the banking system.

The deliveries of cash foreign currency, agreed by the National Bank, are carried out according to the plan, the statement said. The NBU added that it also has a sufficient supply of cash in order to maintain, if necessary, the currency liquidity of the banking system.

The National Bank also noted that the macroeconomic stability of Ukraine today is higher than ever before, and the banking system remains well capitalized, liquid and profitable.

"To maintain the stability of the Ukrainian economy, the National Bank will continue to implement a prudent monetary policy based on inflation targeting and a flexible exchange rate, effective regulation of the financial system and further approximation of the relevant regulation of European standards," the regulator said.

Source: www.en.interfax.com.ua