In March, the foreign exchange market tensions showed signs of abating on account of both prompt regulatory measures by the National Bank of Ukraine and the launch of a new four-year financial aid program under the Extended Fund Facility with the International Monetary Fund. According to Director of the NBU Open Market Operations Department Oleh Churiy "a new program of cooperation with the IMF under the extended arrangement under the Extended Fund Facility has contributed to improving market expectations and setting the stage for long-term economic stabilization in Ukraine". The easing of military tensions in the East of Ukraine has played a significant positive role in stabilizing the situation.

The stabilization measures taken by the National Bank of Ukraine included a blend of conventional monetary instruments, administrative measures, and a more active role of the regulator in the foreign exchange market. In particular, the decision to raise the discount rate to 30% with the corresponding adjustment of interest rates on NBU's asset and liability-side operations has contributed to the subdued money supply dynamics, with the monetary base expanding by just 0.1% in March. Tightening administrative measures by imposing stricter controls over the purchase of foreign exchange and its transfer abroad has helped prevent the unproductive capital outflows from the country. At the same time, a more active role played by the National Bank of Ukraine in the foreign exchange market through both purchase and sale interventions undertaken in March helped mitigate sharp fluctuations in the demand for and supply of foreign exchange that occurred on an ad hoc basis.

A net supply of foreign exchange was recorded in the cash segment of the foreign exchange market in March for the second month in a row. During the month, the amount of foreign exchange sold by individuals exceeded the amount purchased by USD 129.2 million. (In February, a net supply of foreign exchange amounted to USD126.4 million).

The National Bank of Ukraine is set to further exert its best efforts to sustain stability in the foreign exchange market, thus mitigating downside risks to price stability, the achievement and maintenance of which is the priority goal of monetary policy under the applicable legislation.