There continues to be a noticeable currency shortage in Ukraine

The National Bank remains the main participant in the currency market, compensating for the currency deficit from its reserves.

According to the Financial Stability Report by the NBU for June 2024, since October 2023, the NBU has adopted a managed float exchange rate regime accompanied by a series of currency relaxations. Together, these decisions somewhat revitalized the market and increased its liquidity.

"However, a noticeable currency shortage persists. The NBU continues to be a key market participant, with its interventions serving as the main balancing mechanism. The NBU will continue to offset the structural currency deficit in the market," the report states.

Meanwhile, continued international aid inflows and the accumulated volume of international reserves provide the National Bank with the necessary resilience to maintain an active presence in the currency market and minimize its excessive volatility, added the NBU.

According to the central bank's data, banks' profits from currency trading decreased by a third year-on-year due to narrowing exchange rate spreads. Their share in operational income decreased to pre-war levels, approximately 5%.

Since October 2023, the NBU has been operating under a "managed float" regime, controlling the situation in the interbank market by adjusting intervention rates up or down. Since the beginning of the year, the NBU has sold $12.7 billion on the interbank market. These expenditures are offset by international assistance to Ukraine. Banks sell currency to the public at a slightly higher rate due to commissions, resulting in a higher cash exchange rate compared to the interbank rate.