What awaits the hryvnia

Over the past few weeks, residents of Ukraine have been able to observe strange fluctuations in the exchange rate of the national currency. The hryvnia has alternated between confident strengthening and rapid loss of ground. Following the decline, a recovery has once again emerged. This has allowed many businesspeople to make a decent profit.

For instance, one could reserve a specific amount of currency for an hour on the website of “Obmenka Kryvyi Rih” and purchase cash US dollars or euros at a pre-agreed rate, even if the price changed during that time. This is quite profitable and convenient. Therefore, the service enjoys high demand among entrepreneurs.

Currency exchange rates on the black market in Kryvyi Rih differ little from the general state of the market. However, the number of offers is much smaller than, for example, in the capital. Therefore, for the city’s residents, this is a real chance to earn money or protect their savings from inflationary fluctuations.

As of today, currency exchange rates in Kryvyi Rih are characterised by relative stability. However, how long this trend will last and what Ukrainians should expect next remains to be seen.

Prospects for the currency market

In fact, the outlook for the currency exchange rate in Kryvyi Rih, as in the rest of Ukraine, is very hazy. It recently became known that the government sold domestic currency-denominated government bonds at an abnormally high price. According to one source, the yield on OVGZ in currency terms stands at 20%. According to others, it reaches as high as 30%.

On the one hand, this approach allowed for the attraction of a significant amount of currency. This, in turn, led to the strengthening of the hryvnia.

However, one should not be complacent. After a certain period, the state will be forced to buy back the OVGZ. In doing so, it will have to pay 20–30% more. As the saying goes, “we borrow others’ money for a while, and repay our own forever.” But the difference still needs to be sourced from somewhere.

Unfortunately, at present, Ukraine does not have revenues sufficient to cover this difference. According to analysts, this will inevitably lead to a decline in the hryvnia’s exchange rate. The drop could be substantial. Judging by this, the exchange rate built into the 2020 budget does not seem all that unrealistic. Moreover, it could be much higher. Therefore, it is advisable to exchange currency in Kryvyi Rih in advance.