January lockdown will not affect hryvnia exchange rate – president's adviser

January lockdown will not affect hryvnia exchange rate – president's adviser

The tightening of lockdown measures introduced in Ukraine from January 8 to 24 will not significantly affect the exchange rate of the hryvnia against the U.S. dollar, the president's adviser on economic issues, Oleh Ustenko, has said.

According to the presidential press service, Ustenko said that many companies continue to operate and the situation in foreign markets promotes the inflow of foreign currency into the country.

"Restrictive measures mainly concern activities in the field of services, but industrial and agricultural enterprises continue to operate. The banking system also operates. Therefore, lockdown will not have a significant impact on the exchange rate in Ukraine," Ustenko said.

He recalled that according to the forecasts of the Ministry for Economic Development, Trade and Agriculture, the national currency's exchange rate in 2021 may reach UAH 28.6 per U.S. dollar, and experts expect the hryvnia exchange rate this year to fluctuate within UAH 27-29.5 per U.S. dollar.

Ustenko said that the exchange rate in Ukraine is influenced by a number of factors. The first one, according to him, is the state of foreign markets, which is now "actively improving." In particular, prices are rising for groups of goods that Ukraine exports, including metals and agricultural products.

According to him, this means that Ukrainian exporters will start importing more foreign exchange earnings into the country, and the additional supply of foreign currency in the market will create pressure on foreign currencies and help strengthen the hryvnia.

Secondly, he said, the inflow of foreign currency into Ukraine is increasing due to the credit resource.

"This can be seen by the growth of Ukraine's international reserves, which are now the largest in the past decade," Ustenko said.

In addition, he recalled that this year, the Finance Ministry raised more than UAH 17 billion at two auctions to place domestic government bonds, some of them denominated in foreign currency. He said that this indicates that some buyers of domestic government bonds brought foreign currency into the country and converted it into hryvnias.

In this regard, Ustenko said that grounds were being created for the strengthening of the national currency.

Tightened lockdown restrictions were introduced in Ukraine from January 8 to January 24 inclusive in order to prevent the spread of COVID-19.


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