Oleg Ustenko: “The exchange rate of 50 hryvnias to the dollar is one of the scenarios, but it is not the basic one”

17 April 18:48
ЕКСКЛЮЗИВ

In its latest World Economic Outlook forecast, the International Monetary Fund predicts that in 2027 the Ukrainian currency will cross the 50 hryvnia per dollar mark, and by 2029 it will reach 54 UAH/USD. Komersant ukrainskyi https://www.komersant.info/ asked Ukrainian economist and former economic advisor to the President of Ukraine Oleh Ustenko to comment on this forecast.

The expert noted that he does not see any risks in the short term.

“Ukraine’s foreign exchange reserves are currently quite high, and they cover more than 5 months of our critical imports. This is 70% more than is needed to say that the national currency is in a more or less stable state,”

– says Ustenko.

In addition, he adds, Ukraine is currently experiencing a fairly high inflow of foreign currency, particularly in the form of aid from the EU. In March alone, Ukraine received more than €9 billion, and next month it is expected to receive at least €1.5 billion from the EU. This is a significant enough contribution to keep the hryvnia at its current level.

At the same time, there are also negative factors, including a significant trade deficit that objectively arose as a result of the war.

“We are an export-dependent country, but our logistics chains are partially disrupted. And if our exporters do not have a normal opportunity to export their products to world markets, it means that they gradually reduce foreign exchange earnings for themselves and, accordingly, for the country. This is a threatening factor or a factor that plays to the downside. And add to this the significant imports that we have, again, as a result of the war. This is also a negative factor,”

– said the economist.

Another negative factor is the decline in revenues from migrant workers – in the second year of the war, they sent $1 billion less to Ukraine than in 2022.

However, in general, the expert predicts movement within the NBU’s forecast corridor.

“We shouldn’t forget that our state budget provides for an average annual exchange rate of about UAH 40 per USD 1. This means that we should reach this average sometime in June. If we don’t, we may face problems for the state budget. Therefore, I believe that about 40 hryvnias is what we have a right to expect in the coming months. In June, we should be somewhere around this mark,”

– ustenko said.

The economist is not inclined to easily agree with the IMF’s pessimistic forecasts of 54 hryvnia to the dollar. According to Oleh Ustenko, there are many uncertainties that make such forecasts very conditional:

“Much depends on the war, of course. When the war is over, we can expect a fairly high inflow of foreign investment into the country. This is the first factor. The second factor is the inflow of funds due to the fact that we will be on the way to joining the EU. The third is that I would expect an inflow of reparations funds from the aggressor country, from Russia.”

That is, a sufficiently high inflow of foreign currency into the country, on the contrary, will work to strengthen the hryvnia, the economist says.

“And yet, we are talking about a 5-year plan, which means that different options are possible. We need to look at the situation on the global markets – first of all, in terms of inflation in our main economic partners, the US and the EU. A rate of 54 and above means that inflation in the US and the EU will remain high, the war will continue, and other negative scenarios. This may be one of the scenarios, but it is definitely not the basic scenario to be guided by,”

– commented Oleg Ustenko.

Остафійчук Ярослав
Editor