The situation at the front certainly affects the psychological state of everyone, accordingly it affects the financial markets, the economy and expectations: anxiety and tension accumulate and are looking for a way out, but at the moment the situation on the financial market is stable, according to the head of the National Bank of Ukraine (NBU) Andrii Pyshnyi .
“We saw a similar impact in July this year, when exchange rate volatility began to increase. The National Bank ensures the stability of the market with the instrument of interventions, so we felt it in their volume, in the growth of demand and tried to understand what is happening, what affects and feeds this nervousness of the market. Then the market stabilized, thanks in particular to the actions of the National Bank,” he said in an interview with the Interfax-Ukraine agency.
“Currently, the situation on the market is stable, the presence of the National Bank is effective, managed flexibility as a tool is working,” Pishniy noted.
He also emphasized that the hryvnia exchange rate has stopped responding to shelling for a long time.
“It is obvious that exchange rate fluctuations have a considerable psychological component. At the same time, if earlier (at the beginning of the war) the reaction of the cash rate to the shelling was noticeable, now it has not been observed for quite a long time,” stated the head of the National Bank.
He added that he first noticed a similar situation for himself in October 2022, immediately after being appointed to the position, when the first massive strikes on critical energy infrastructure facilities and the first long-term blackouts began.
“Later, I noticed that the correlation between the shelling and course dynamics disappeared, because we survived that first moment, we already had the first experience… Unfortunately, we are already to some extent used to the threat of missile strikes and the disgusting buzzing of “mopeds”. Living in the reality of a permanent threat, we have become not indifferent, but alert,” Pyshnyi noted.
According to him, then, in October 2022, this transformation of public consciousness also affected the course dynamics. “We even saw an inverse correlation between shelling and exchange rate dynamics, but of a different plan: after every heavy shelling or aggravation of the situation on the front, which we went through without breaking down, there was even a certain revaluation,” the head of the NBU shared his observations.
He recalled that at that time the central bank did not have such a tool as managed flexibility of the exchange rate, but the cash rate reacted in this way.
“We used to call it the ‘sustainability factor’ among ourselves.” The course as a reflection of society: each time we were restored and the hryvnia was restored. My colleagues and I even tried to calculate this “stability factor” and include it in the forecast as one of the positive risks, because we have repeatedly seen how this situation works in matters related to the stability and adaptability of Ukrainian business, which is very often talked about. Pyshnyi said.
He emphasized that Ukrainian business is absolutely unique, because it is able to find solutions in such difficult situations as the loss of 30% of GDP, shelling, absolutely critical situation at certain moments with energy supply. “And every time, it seems, he finds them faster, cheaper, more efficiently. And then it moves to the next stage,” added the head of the NBU.
