This is reported by RBK-Ukraine referencing the "Inflation Report" from the National Bank of Ukraine (January 2025). The information comes from Kontrakty.UA.
The NBU noted that in the IV quarter of 2024, the demand for foreign currency significantly increased. Among the key factors were record-high budget expenditures, which were largely financed through international financial aid.
Additionally, there was an uptick in purchases by importers of certain consumer goods, and business operations allowed under the liberalization of currency restrictions increased.
"In such conditions, responding primarily to the increase in the structural currency deficit from the private sector at the end of the year, the NBU raised net sales of foreign currency to 11.4 billion dollars in the IV quarter (compared to 9.2 billion dollars in the III quarter). This helped calm market participants' expectations, particularly households, and contributed to stabilizing demand in the cash segment," - explained the NBU.
As a result, the difference between cash and official exchange rates in the IV quarter was minimal - around 1%, according to the NBU.
Expectations for 2025
It is anticipated that in 2025, Ukraine will receive 38.4 billion dollars in external financing. "Considering the expected volumes of international financial assistance in 2025, the NBU's high capacity to offset the structural currency deficit in the private sector and smooth out excessive exchange rate fluctuations will continue," - stated the NBU.
The resilience of the currency market will remain a crucial element in maintaining manageable expectations among economic agents and returning inflation to the target of 5%, the NBU added.
Structural Deficit
According to the NBU's assessment, the structural currency deficit of the private sector will remain significant in 2025 but will gradually decrease over time. As the economy normalizes and currency liberalization continues, the inflow of investment and debt capital into the private sector will increase. Export revenues will also rise due to a gradual increase in global grain prices and some growth in agricultural crop yields.
Currency Interventions
Recall that the National Bank of Ukraine sold 5.3 billion dollars on the interbank currency market in December 2024. This is the highest monthly volume in history. Overall, in 2024, the NBU sold 34.8 billion dollars in the interbank market, which is 6.2 billion dollars more than in 2023.
However, in 2024, Ukraine received 42 billion dollars in international assistance, which offset the NBU's expenditures.
The dollar exchange rate increased by 10.7% to 42.03 hryvnias in 2024.