The past week turned out to be too calm for the cash currency rate. This applies to both official and illegal markets, as well as the exchange rates of the two main currencies: the dollar and the euro. However, financial analysts do not rule out that this is a kind of calm before the storm: the market froze in anticipation of the results of the board meeting of the National Bank of Ukraine, which is to be held on July 27.
What can happen to the exchange rate if the regulator makes certain radical decisions, whether it is worth investing in the currency now to save it from depreciation, what is currently more profitable: the euro or the dollar, read in the weekly analytical project of the TSN.ua website.
You will learn:
- what is happening in the cash currency market;
- what to expect from the course next week;
- sell or buy cash currency.
Our experts: Oleg Pendzyn, a member of the Economic Discussion Club, Oleksandr Okhrimenko, president of the Ukrainian Analytical Center, and Andrii Shevchyshyn, head of the analytical department of the International Academy of Stock Trading.
What is happening in the market
According to the information of specialized sites, such as finance.ua and minfin.com.ua, in banks and POVs (currency exchange offices), the cash dollar started the week with an average of UAH 37.33 in sales and UAH 36.76 in purchases, and ended at UAH 37.31 and UAH 36.75, respectively. Fluctuations per week were within five kopecks. The euro fell in price by an average of 18 kopecks per week. on sale (up to UAH 41.68) and for 7 kopecks. in the purchase (up to UAH 40.93).
On the illegal market, according to the “miniaylo” service of the finance.ua website, where applications for the purchase and sale of cash currency between individuals are published, the average dollar selling rate at the end of the week was UAH 37.18 (-2 kopecks), the average buying rate was UAH 37 (+20 kopecks), for the euro, respectively, UAH 41.70 (0 kopecks) and UAH 41.38 (+16 kopecks).
According to Oleksandr Okhrimenko, bankers a week ago “raised” the euro currency rate too much, which significantly affected demand, and they had to reduce their appetites. But illegals not only found a middle ground in sales, but also actively bought cash, which is evidenced by the growth of the purchase rate at an almost unchanged sales rate.
“It seems that the money changers are waiting for the price to rise, so they are actively buying currency“, the expert suggested.
The most expensive to hand over a cash dollar on the “white market” are banks and POVs, you can get UAH 37.01 (+1 kop. per week) per dollar, the cheapest buy – UAH 37.15 (+2 kopecks). Euro – 40.98 (-18 kopecks) and 41.20 (-20 kopecks) UAH, respectively. Currency for sale is available both at bank counters and exchange offices.
The official exchange rate of the National Bank is stable at UAH 36.56/dollar. The official exchange rate of the euro decreased, although not much compared to the rapid price increase two weeks ago: after growing by more than hryvnia (to 41.05 hryvnias/euro), over the past week the euro fell by 6 kopecks (to 40.99 hryvnias).
On Monday, July 24, the NBU further devalued the euro, setting the rate at UAH 40.66/euro (-39 kopecks compared to July 17).
What to expect in the coming week
According to Andriy Shevchyshyn and Oleh Pendzin, the main news this week may be the National Bank’s reduction of the discount rate, that is, the annual interest rate at which the NBU lends hryvnia to commercial banks. We will remind, now the discount rate is equal to 25%. According to their estimates, the rate can be reduced by 3-5%.
“It does not directly affect the hryvnia cash rate, but the expectation of a decrease can cause noticeable fluctuations in the rate during the week, because the lower the discount rate, the cheaper the hryvnia and, accordingly, the more expensive the dollar,” explained Shevchyshyn.
But the fixed exchange rate of the dollar will most likely remain in the future, Pendzin believes. This will become an additional factor of hryvnia stability.
Oleksandr Okhrimenko does not predict any cardinal decisions from the NBU on July 27, but there are, in his opinion, certain “buts”.
“Now everything suits everyone, international financial aid to Ukraine is fully implemented, so there is no point for the regulator to change anything,” Okhrimenko is sure.
Sell or buy currency
Experts have different opinions.
Andriy Shevchyshyn advises to buy cash dollars with free funds while they are cheap, to keep them either on deposit or “under the mattress”, hoping for a rapid increase in price in the next 8-12 months.
“However, it is not worth selling currency now unless absolutely necessary,” Shevchyshyn emphasized.
For reference: now banks offer a maximum of 2.1% on dollar deposits with a term of one year, the smallest deposit size is $100. That is, in July 2024, it will be possible to earn a little more than two dollars (about UAH 80) per hundred plus income from a possible increase in the price of the dollar.
According to Oleksandr Okhrimenko, Euros are now more profitable to buy than dollars. The expert explained: foreign financiers believe that the euro is undervalued against the dollar by 36% and hope for its further appreciation. In his opinion, in about six months it will be possible to profitably exchange the euro for hryvnias. It is estimated that the income can amount to approximately one hryvnia for each euro, that is, it is already about 4% per annum. Plus income from rate growth.
“However, in order to obtain the maximum income, it is necessary to regularly monitor the cash rate so as not to miss a profitable moment,” the expert emphasized.
Oleg Pendzyn believes that it is not the right time to buy currency at all, in order to earn something from it soon: it is more reliable and profitable to open a short-term, 3-month deposit in hryvnia.
“There are banks that offer even 21.5% per annum on such deposits. This is about half as much as inflation. You will get a guaranteed profit, because even in the event of a bank bankruptcy, the state will compensate depositors for losses. And in October, depending on the situation, it will be possible to switch to foreign currency savings. Or continue the hryvnia deposit,” the expert explained.
According to estimates, every thousand hryvnias in October can give an income of about 50 hryvnias.
We will remind you that earlier experts gave a detailed forecast of what will happen to Ukraine’s economy in 2023-2024.
The NBU said whether they will revise the official exchange rate of the dollar
Russia withdraws from the “grain agreement”: will the dollar rate in Ukraine jump after this
The expert told what to expect from the dollar exchange rate in mid-July