The FX market situation remains stable. 

The supply of foreign currency has exceeded the demand for it in the interbank FX market since mid-September due to large inflows of foreign exchange proceeds from exports of new harvest. This has enabled the National Bank of Ukraine to purchase foreign currency to replenish international reserves without counteracting the appreciation trend. Since end-September (26 September 2016), the NBU has held 14 FX purchase auctions, through which USD 330 million was purchased to replenish international reserves.

We expect the inflow of FX proceeds from grain and sunflower oil exports to continue to be the key factor in shaping FX market conditions until the end of the year.

At the same time, the current situation in the external markets due to results of the USA elections can bear limited short-term effect on the state of internal Ukrainian FX market. 

As with Brexit earlier this year, increased turbulence in the external markets will affect Ukrainian economics through global commodities markets. In our opinion, oil prices will react the most on the USA elections results. According to our forecasts, prices on grain, oil and metals, which comprise main exports of Ukraine, will react less significantly and will win back over time. So, in case of their temporary downfall, significant incomings from exports of the new harvest cannot be offset for the Ukrainian FX market.

Turbulence in the world financial markets will not have a great impact on FX market due to absence of access of Ukraine to capital markets.

Consequently, we don’t expect such volatility of exchange rate, which would create significant risks for inflation to exceed targets (12% +/-3% for 2016 and 8% +/-2% for 2017).