UAH/US$: Depreciation Risks In 2010

The Ukrainian hryvnia has maintained its steady appreciatory momentum since the end of Q309, with the unit briefly trading above UAH8.0000/US$ for the first time since August in late November. While we expect the currency to continue posting gains against the dollar through the remainder of 2009, Ukraine's still weak macroeconomic outlook, coupled with elevated political risk and easy monetary policy, will put significant downside pressure on the currency beyond the immediate term. As a result, we have pencilled in an end-2009 forecast of UAH7.8500/US$, with depreciation back to UAH8.5000/US$ by end-2010.

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