June – Monthly Update For Current Year 2020 Exchange Rate Forecast

Events in March were the most turbulent of the year, due to fallout from the
coronavirus (COVID-19) pandemic. They led to the devaluation of the hryvnia
from 24.5 to 28.2 UAH/USD and changed our exchange rate forecast for
the current year.


According to our group’s forecast calculations detailed in this report, the
hryvnia will be in the currency corridor of UAH 27.0/USD to 28.5/USD during
April.


The most probable calculated value of the exchange rate on April 1, 2020, is
UAH 27.5/USD.


We analyzed the fundamental factors in March that influenced the exchange
rates and balance of supply and demand of currencies in Ukraine. Based on
our analysis of external payments, progress in obtaining external loans
(primarily from the IMF) in new conditions and changes in the foreign trade
environment (in terms of the export-import of goods and services), in
addition to new fundamental factors of capital inflows and outflows to/from
Ukraine which became apparent this month, we present two probabilistic
scenarios for the hryvnia to the end of the current year (Scenarios A and B).
According to the moderately optimistic scenario (Scenario A) for calculating
the country’s foreign currency balance sheet, we forecast a hryvnia exchange
rate on December 31, 2020, of 25.9 UAH/USD (with probable deviations
in the UAH 25.5-27/USD corridor).


According to the moderately pessimistic scenario (Scenario B) for calculating
the country’s foreign currency balance sheet, we forecast a hryvnia exchange
rate for December 31, 2020, of UAH 28.3/USD (with probable deviations in
the UAH 27.0-29.5/USD currency corridor).


The forecast assumes the Year End (YE) balance of payments of Ukraine in
2020 at the level of minus $1.5 billion (taking into account the receipt of
external financing from the IMF in the amount of $8 billion) and the balance
of foreign currency reserves of the NBU amounting to $25.3 billion at YE
2020.

EN: April_MU_Exchange_Rate_Forecast_UEO

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