UAH: Expect Further Sideways Trading

The Ukrainian hryvnia remains broadly stable, having traded within a narrow band between UAH7.9000-8.0000/US$ since the fourth quarter of 2009. Given ongoing interventions on the foreign exchange market by the National Bank of Ukraine (NBU) in an effort to smooth daily fluctuations, we expect the currency to continue trading within this tight range in the near term. That said, given the unit's de facto peg to the US dollar, it is important to note that the hryvnia continues to strengthen markedly against the euro (appreciating to UAH9.4501/EUR in early June from UAH12.00/EUR in Q409), and looks set to post further gains towards UAH9.0000/EUR over the coming months.

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