Currency liberalization led to a record reduction of Ukraine’s currency reserves by $3.4 billion per month. This is the largest reduction since the beginning of the war.
Former chairman of the NBU Council Bohdan Danylyshyn expressed concerns about the consequences of liberalization, because it has led to the loss of reserves, which are a key bastion in the protection of the country’s macro-financial defense.
The main factor of pressure on the hryvnia exchange rate was the increased demand for currency from the population and small businesses, which bought $9.7 billion of cash currency in 5 months.
The increase in demand for foreign currency is mainly related to the pressure on the market for purchases by households and small businesses.
“In January-May 2024, they bought $9.7 billion worth of cash currency, which is $2.6 billion more than in the same period last year.”, – notes the author of the article.
The NBU actively conducted currency interventions, selling $11.2 billion from January to May to support the hryvnia.
Danylyshyn emphasizes that the recent reduction in the discount rate and some weakening of the hryvnia exchange rate are rather a signal of positive trends than of readiness for a serious softening of monetary policy.
As experts noted earlier, currency reserves are a key bastion in the defense of “macro-financial defense”.
