Today, on 28 December 2016, the interbank FX market continues to see temporary excess demand for foreign currency driven by situational factors.

The supply of foreign currency, which yesterday was limited due to the Christmas holidays in the U.S. and Europe, was partially recovered today. But it is still not enough, as budget VAT refund, which exporting companies received last and current week, restrains their demand for hryvnia liquidity, and, therefore, the sale of their FX earnings.

At the same time, recent days the demand of market participants significantly increased due to the need of companies to make payments under FX loans in the end of the year.

As a side note, when the short-lived factors play a dominant role in the FX market, the NBU is ready to perform foreign exchange interventions to smooth out excessive exchange rate volatility and has has enough instruments to make it. Ukraine’s international reserves currently amount to USD 15.7 billion. This amount is sufficient for conducting foreign exchange sale interventions and enabling the NBU and the Government to settle their foreign debt obligations.

Thus, yesterday, on 27 December 2016, NBU satisfied market participants during FX sale auction in amount of USD 46.8 million to prevent excessive volatility of hryvnia exchange rate.

On 28 December 2016, the National Bank of Ukraine also announced a FX sale auction. Auction amount: up to USD 100 million.