The financial market includes the money market, the capital market, and the FX market. The NBU operates in the financial market to achieve monetary policy goals. We offer loans to banks, place our certificates of deposit, and buy and sell securities and foreign currency. This is how we influence the value of money and manage inflation through the transmission mechanism.

The NBU regularly grants loans to the banks and places certificates of deposit with them, trying to keep interest rates in the interbank credit market close to the NBU’s key policy rate.

If there is a systemic deficit or surplus of liquidity in the market, it can significantly affect money market rates. When that happens, the NBU can adjust the amount of liquidity by buying or selling government securities.

The NBU is implementing the regime of managed exchange rate flexibility, in line with the Strategy for Easing FX Restrictions, Transitioning to More Exchange Rate Flexibility, and Returning to Inflation Targeting. Under this regime, the NBU will intervene in the interbank foreign exchange market to cover the structural deficit of foreign currency. This will allow the exchange rate to fluctuate in both directions: both weaken and strengthen. In addition, the NBU will significantly limit exchange rate fluctuations though its interventions.