What's Ahead Of UAH (Ukrainian Hryvnia)? What About (RUB) Russian Currency? | ING Economics



View improved, but gradual depreciation still possible


Current spot: 57.02

  • Having touched 67 in May (we expected 70), USD/RUB is back into 55-60 range in June on higher oil and weak imports. To help banks rebalance FX positions, Russia abandoned mandatory FX sales for exporters, allowed them to accumulate foreign FX assets, and raised limits for outward FX transfers for individuals.
  • Capital flows are still limited externally, meaning the ruble is driven by trade flows. In May, the current account surplus narrowed to more “normal” US$14.5bn vs US$37.6bn in April on a moderation of exports.
  • We still see gradual ruble depreciation into the year-end on finalization of EU oil embargo for non-pipeline supplies, but do not exclude near-term volatility on recent regulatory actions and tax periods that take place every second half of the month.


NBU prevents depreciation as the war continues

Current spot: 29.55

• USD/UAH stabilized very close to 29.55 in the recent weeks. With continued Russian aggression in sight, this requires massive NBU FX interventions. Stabilizing the FX rate is one of the key factors needed to curb inflation. The central bank reaffirmed this goal, when it hiked rates by 15ppt earlier this month – from 10% to 25%.

• While currently only the NBU policy prevents hryvnia’s losses, we expect the currency to gain as the war de-escalates. Frozen Russian assets worldwide are expected to partially serve as postwar relief for Ukraine. Foreign aid will also be mobilized. Those in turn should be converted at least partially via the market. Stabilizing, or strengthening the currency should be one of the tools used to curb inflation during the post-war reconstruction.




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