The panic on the foreign exchange market is fading, but the currency deficit is growing again - the analyst

Panic moods on the cash currency market of Ukraine are gradually fading - the population, which in previous weeks was actively buying dollars and euros just in case, is again starting to sell the accumulated currency. At the same time, the overall currency deficit in the market is again approaching historical highs. This is stated in the weekly review of the foreign exchange market for November 9-12 by financial analyst Andriy Shevchyshyn.

A currency shortage is a situation when the demand for dollars and euros from the population and businesses exceeds the supply from exporters, remittances and the sale of savings. In the conditions of managed exchange rate flexibility supported by the National Bank, such an imbalance is not always immediately reflected in the cash rate, as the NBU has instruments for smoothing interbank fluctuations. But the larger the deficit accumulates, the more pressure the hryvnia will experience in the medium term.

Why panic and scarcity do not contradict each other

At first glance, the situation looks paradoxical: the popular demand for currency is falling, and the general deficit in the system is growing. This is explained by the fact that short-term panic among citizens is only one of the components of the currency balance. Even if private individuals calm down and return part of the currency to the market, the fundamental deficit can be maintained due to other factors of supply and demand in the economy - imports, service of external obligations, seasonal business needs at the end of the year.

For an ordinary consumer, the main conclusion is simple: the disappearance of queues and hype at exchange offices does not mean automatic strengthening of the hryvnia. While the currency deficit remains high, pressure on the dollar and euro remains, and fluctuations in the coming weeks are quite possible. Those who plan large currency transactions should monitor the current exchange rate and not make decisions based solely on emotions from news about a panic or its fading.