'45 by the end of 2025'. What will happen to currency exchange rates after central bank's decisions?
The regulator's decision will lead to higher deposit and domestic government bond rates, which will help strengthen the hryvnia. However, there are no factors to halt devaluation
In early March, the NBU's board decided to raise the key policy rate to 15.5% per annum. The regulator explicitly stated that the decision aims to bolster the hryvnia.
"These decisions are aimed at maintaining the attractiveness of hryvnia savings, the stability of the currency market, and the controllability of inflation expectations," the central bank’s press service said.
LIGA.net analyzed how this decision will affect the profitability of bank deposits and the dollar exchange rate at currency exchange offices.
The impact of the key policy rate on deposits
In response to the NBU's rate hike, deposit rates could rise to 17% per annum, according to banking sector representatives.
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