Ukraine’s regulator continues to sell reserves to meet demand for currency as threat of Russian invasion looms

16 February 2022, 04:57 AM

The National Bank of Ukraine (NBU) sold $377 million from reserves on the interbank forex market on Feb. 14 to meet demand for currency amid the ongoing threat of Russian invasion, Oleksii Lupin, Director of the NBU’s Open Market Operations Department, has told the NV weekly news magazine.

Lupin stressed that the interbank forex market had immediately reacted to the perceived increased risk in the political sphere by the end of last week.

“On Friday, the demand for (currency) prevailed over the supply, and we sold $50 million to smooth out excessive fluctuations,” Lupin said.

“Given that this wave of news began at the end of the week, there was an increase in demand in the cash market segment over the weekend, which led to a fairly significant increase in the dollar exchange rate at the start of trading on Monday.”

Video of day

“In the first hours of trading, we managed to meet this excess demand and the rate was slightly adjusted. During the day, we actively smoothed out excessive fluctuations in the market and sold $377 million, which contributed to mollifying this increased demand,” the banker said.

The Ukrainian hryvnia has been rapidly losing value since the beginning of media reports on Russian escalation in Dec. 2021, going from UAH 27.28 per $1 at the start of December, to UAH 28.53 at publishing time – a 4.58% drop in value over the past two months.

Russia’s potential invasion of Ukraine

U.S. political media outlet Politico reported on Feb. 11 that U.S. President Joe Biden told Western leaders that Russia could start a military attack on Ukraine as soon as Feb. 16.

Meanwhile, the Bloomberg news agency speculated that fresh Russian aggression against Ukraine could renew on Feb. 15. Russia in turn accused the Western media of a “large-scale disinformation campaign.”

In response, Ukrainian President Volodymyr Zelensky has again said that the Ukrainian government has “everything under control,” and declared Feb. 16 a “Day of Unity” for Ukrainians.

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