What will happen to the dollar and the euro by the end of May, and is now a good time to buy foreign currency: a banker’s assessment
24 May 02:18
The end of May will not see any sharp currency fluctuations—the market remains calm, and there is currently no reason to expect a sharp rise in the dollar or euro. In a comment to RBC-Ukraine, Taras Lesovyi, Director of the Department of Financial Markets and Investment Activities at GLOBUS BANK, discussed what the currency corridors will look like from May 25 to 31 and whether it makes sense to open hryvnia deposits instead of buying foreign currency, as reported by "Komersant Ukrainian".
Why pressure on the dollar and euro has eased
According to Lesovyi, the stability of the currency market at the end of May is supported by several important factors. First and foremost, this is the situation on the fuel market.
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After a very significant price hike in March, when gasoline rose by 14% and diesel by 36%, the pace of growth slowed significantly in April. At that time, gasoline and diesel prices rose by only 1–1.5%. In May, the trend was uneven, but there were no sharp spikes: periods of price declines alternated with slight increases.
The expert notes that gas station prices are extremely important for the currency market, as they affect not only businesses’ direct costs but also public sentiment and expectations.
So, when fuel prices rise rapidly, people usually expect broader price increases across the board and are more likely to consider buying foreign currency as a way to preserve their funds. When the situation at gas stations stabilizes, psychological demand for the dollar and the euro decreases.
An additional stabilizing factor is the expected decline in inflation. By the end of May, it could be around 0.5–0.7%, which, on an annualized basis, suggests a decline to 8%.
The absence of sharp price shocks, particularly for fuel, reduces overall anxiety and partially eases pressure on the foreign exchange market. This has a positive impact on public sentiment, facilitates business planning, strategically reduces demand for foreign currency, and increases the role of hryvnia-denominated savings instruments—primarily deposits and government bonds.
Deposits or foreign currency “just in case”: which is more profitable
Another important element of stability is the National Bank’s decision to keep the discount rate at 15%. This decision continues to maintain the high attractiveness of hryvnia deposits for the public.
As Lesovoy explains, maximum deposit rates, taking into account promotional offers from commercial banks, currently range from 16% to 17.5% per annum. Therefore, over the next six months, hryvnia deposits may remain one of the most straightforward tools for protecting funds against devaluation.
Even taking into account the NBU’s revised forecast, according to which inflation could reach 9.4% over the year, and factoring in a 23% tax on deposit income, citizens’ net profit could amount to 3–4%.
For the average depositor, this means that hryvnia deposits not only remain entirely relevant but can also be a profitable and sensible alternative to buying foreign currency “just in case.”
It is also important that the NBU continues to actively operate in the market and, through interventions, prevents demand from excessively outstripping supply.
The expected weekly volume of interventions will be approximately $800–850 million. This level indicates that demand for foreign currency is still slightly higher than supply and requires the National Bank’s ongoing involvement. However, this demand does not exceed the “moderate” range of dominance, which stands at 10–15%.
Detailed market characteristics for May 25–31:
The analyst has prepared a detailed forecast of the foreign exchange market’s behavior for the coming week based on key indicators:
Daily “step” in exchange rate changes: on the interbank market, up to 0.05–0.15 UAH; at commercial banks, up to 0.1–0.2 UAH; at exchange offices, up to 0.3 UAH.
The difference between buying and selling rates (spread):
- on the interbank market: up to 0.15 UAH per dollar, up to 0.2 UAH per euro;
- at commercial banks: up to 0.5–0.6 UAH per dollar, up to 0.8–1 UAH per euro;
- at currency exchange offices: up to 0.6–1 UAH per dollar, up to 1–1.3 UAH per euro.
The “corridors” of permissible currency fluctuations will be 43.8–44.35 UAH per dollar and 50.5–52.5 UAH per euro (on the interbank market) and 43.75–44.5 UAH per dollar and 50.5–52 UAH per euro (on the cash market).
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