National Bank of Ukraine sells $739.5M in currency market

KIEV – The National Bank of Ukraine (NBU) has actively participated in the currency market, selling a significant amount of foreign currency in an effort to manage the exchange rate and monetary policy within the country. Recent reports indicate that between November 27 and December 1, the NBU sold approximately $739.5 million.

This latest intervention is part of a broader strategy that has seen the NBU sell a total of $25.548 billion so far in 2023, while only purchasing $214.66 million. These actions represent a marked shift from the previous year’s transactions, where the bank sold $26.38 billion and purchased a notably higher amount of $3.27 billion.

The move towards a more active role in the currency market follows a change in policy earlier this year, when under the leadership of Governor Andriy Pyshhnyy, the NBU transitioned to a managed flexibility exchange rate regime. This shift came after a period of maintaining a fixed exchange rate that lasted until October 3, 2023.

The NBU’s interventions are aimed at stabilizing the hryvnia, Ukraine’s national currency, amidst various economic challenges. By selling foreign currency, the central bank can influence the exchange rate to help control inflation and support overall economic stability.

The managed flexibility regime allows for some fluctuation in the exchange rate, guided by market forces, but still permits the central bank to intervene when deemed necessary to prevent excessive volatility that could harm the Ukrainian economy. This approach represents a balance between the rigid fixed exchange rate and a fully free-floating currency system.

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