Ukrainian currency market was under the threat of another “strike.” The Ministry of Finance estimates, due to the blockade of certain regions of Donetsk and Lugansk regions, the balance of payments the country could lose two billion dollars. On the uncontrolled territory left dozens of large companies that not only pay taxes to the Ukrainian budget, but also brought export revenue. In addition, the IMF postponed the decision on granting Ukraine the next tranche. The website “Today” has found out, what will happen to the hryvnia in the near future.
The reasons of a possible devaluation
The tranche was postponed. The IMF was excluded from the agenda of the Board of Directors the question of granting Ukraine the next tranche. Last week the government agreed on the final version of the Memorandum, the decision was expected this week. Finance Minister Alexander danyluk explained: the creditor must take into account the new economic situation in the country, which resulted from blockade of Donbass. “The postponement was due solely to the need to clarify calculations of the economic consequences of the measures taken by Ukraine in response to the blockade, the seizure of Ukrainian enterprises in uncontrolled territories, and also in connection with the recognition by the Russian side of the documents issued in these areas”, — said danyluk.
“The postponement was due solely to the need to clarify calculations of the economic consequences of the measures taken by Ukraine in response to the blockade, the seizure of Ukrainian enterprises in uncontrolled territories, and also in connection with the recognition by the Russian side of the documents issued in these areas”, — said danyluk.
Executive Director of the International Fund blazer Oleg Ustenko says Ukraine needs at least five billion dollars of external financing this year. “This amount is calculated before the blockade. After it was legalized the decision on the blockade, but this figure may be more than five billion. To obtain external financing in the first place to the cooperation with the IMF, without him to find the money possible, but extremely difficult,” – says the expert.
The Deputy Director of analytical Department of Alpari Natalia Milchakova reminds that the situation with the postponement of the decision for technical reasons is not new. “We believe that the dollar on this news will react sluggish,” adds the expert.
Leading expert of the FOREX CLUB in Ukraine Andrey Shevchishin sure tranche of the IMF fulfilled rather the function of psychological support for the currency market. However, in terms of the expected “drawdown” of the economy by 1.5-2% due to the blockade ORDO and nationalization of enterprises on the territory ORDA, the situation has changed. “Tranche becomes necessary because the loss of exports to reach 1.5-2 billion dollars per year. Therefore, the tranche in the amount of billion dollars, would be very useful. In 2018-2020, Ukraine will have to pay $ 18 billion, which requires the accumulation of resources, the functioning of the economy and a balanced budget,” – said the expert.
The impact of the embargo. At the end of last year, the total export revenues of Ukraine amounted to 36.3 billion dollars, more than seven billion of this amount is export of metal products. At the meeting in the Cabinet of the President of the Association of Enterprises “Ukrmetallurgprom” Alexander Kalenkov has estimated the losses from the embargo at $ 3.5 billion. At the same time, the Ministry of Finance has estimated that losses could range from 1.2 to two billion dollars in export revenue, the same forecast was made in the national Bank. The reduction in revenue will increase the pressure on the hryvnia. EP writes, in the Ministry of Finance has estimated, in the closure rate of the national currency in Ukraine by the end of the year will be in the range of 30-32,6 hryvnia to the dollar.
The Deputy Director of analytical Department of Alpari Natalia Milchakova is sure: soon the blockade on the hryvnia exchange rate will not be affected. “Despite the fact that the blockade continues long enough, the dollar reacts to it is quite sluggish. Over the past two weeks, the hryvnia even appreciated against the dollar by 0.4%. We believe that the transport blockade significant impact on the exchange rate will not have, as the worsening situation in Eastern Ukraine, apparently priced in by the market”, – said Natalia Milchakova. The expert notes: the strengthening of the hryvnia in the blockade.
“Nationalization” of the Ukrainian enterprises and the blockade will reduce foreign exchange earnings. However, at the moment the shortage of foreign currency to cover farmers, who register the currency under the sowing, the analyst of FOREX CLUB.
“While there is a seasonal dominance of the offer over demand on the currency market, the hryvnia does not respond to a negative background. Farmers are keeping the currency under the sowing, cover the shortage of currency. In the future, speculative demand may increase”, – the expert adds.
What will happen to the hryvnia exchange rate
“The threat of a sharp devaluation of the hryvnia not. Already, the hryvnia was devalued, and since the beginning of the year slowly is consolidating,” says Natalia Milchakova. According to estimates Alpari, in the next month , the dollar in Ukraine will be sold at a 26.8-27 UAH. Expert on financial policy at the Institute of social and economic research, Antonina deshko adds: the last time the Ukrainian currency market shows “the wonders of sustainability”. The national currency fluctuates throughout the last month within 27,18 (the maximum value of the second of March) to 26.18 (minimum 13 March) hryvnias per dollar.
“The threat of a sharp devaluation of the hryvnia not. Already, the hryvnia was devalued, and since the beginning of the year slowly is consolidating,” says Natalia Milchakova.
“It is hoped that in the near future exchange rate fluctuations will be minor. Although one should not exclude the influence of psychological factors and the resulting speculative sentiment in the market. In the longer term, on the state of the currency market can significantly affect the impact of the shortfall of foreign exchange earnings from the enterprises of metallurgy”, – the expert adds.
However, there are positive factors. So, in the near future (tentatively in late March/early April) Ukraine could receive a second tranche of macro-financial assistance from EU in the amount of 600 million euros. The corresponding decision has been made on March 16. The money will replenish foreign exchange reserves of the national Bank.
The situation with the IMF for assistance from the European Union will not be affected. “We are closely monitoring the situation around the decision of the IMF, but at the moment our announcement, made last Thursday, March 16, remains in force, that is, Ukraine will be able to get the second tranche in late March or early April of 2017”, – stated in the press service of the EU delegation.
By the way, a possible devaluation of the hryvnia will allow the Cabinet to increase budget revenues of the country. The budget of the country because of the blockade will lose about 10 billion hryvnia, but if the hryvnia devaluates, the state collected 14.8 billion hryvnias of taxes more. As a result, the budget income will come in plus 3.9-4.7 billion.
