USD/UAH Outlook:
The USD/UAH is slightly positive, but likely to move sideways as it is above its recent average and demonstrating stability. While the rate is trading above the three-month average, the absence of strong drivers suggests limited movement.
Key drivers:
• Rate gap: The Federal Reserve maintains a more aggressive monetary policy compared to Ukraine's National Bank, providing some support for the USD.
• Risk/commodities: Oil prices remain volatile, which could impact the UAH negatively if they rise.
• One macro factor: Increased budget expenditures in Ukraine have temporarily weakened the hryvnia, but no sharp decline is expected.
Range:
The USD/UAH is likely to hold within its current narrow range following a period of stability.
What could change it:
• Upside risk: A hawkish tone from the Federal Reserve could strengthen the USD further.
• Downside risk: A significant rise in international support for the UAH could stabilize or strengthen it against the USD.
