This week Ukraine’s interbank FX market has continued to experience pressure from political instability despite favorable fundamental external factors. Although Ukraine continues to receive large inflows of FX proceeds from grain and sunflower oil exports, global prices for steel and iron ore rebounded, with  an escalation of political tensions triggering FX market jitters, thus offsetting the impact of favorable factors.

As a result, the exchange rate of the hryvnia crossed the mark of UAH 26 per USD 1. Therefore, further destabilization of the political situation could trigger exchange rate volatility, could have negative implications for the economy.

The National Bank of Ukraine keeps a close eye on FX market developments and has sufficient international reserves (USD 15.5 billion) to smooth excessive exchange rate volatility should the FX market experience a further surge in volatility.