The National Bank of Ukraine (NBU) commented on the sharp increase in exchange rate volatility in the foreign exchange market that occurred at the end of last week and the beginning of this week. According to NBU representatives, increased budget spending was the main cause of these changes, but the regulator has sufficient international reserves to stabilize the situation.
The NBU noted that budget spending has increased over the past week, which, in turn, has affected demand for foreign currency. The government had previously decided to partially limit spending, but this did not halt the rise in demand for foreign currency, which became evident in the market.
In addition, the exchange rate was affected by logistical problems that led to a reduction in the supply of foreign currency, particularly from the agro-industrial sector and the metallurgical industry. The NBU noted that the supply of foreign currency, which had been supported by state-owned enterprises, became unstable, leading to an increase in net demand.
According to NBU data, the average net demand for foreign currency in October was $182 million, and in recent days this figure has risen to $230 million. Increased demand is also being observed in the cash market and through international payment systems.
Against the backdrop of rising demand, the NBU has increased the volume of its foreign exchange interventions to maintain stability in the foreign exchange market. The regulator emphasized that its involvement in the foreign exchange market will continue, as this is important for managing economic expectations and inflation, which is projected to reach 12.5% in 2026.
