Why has the dollar decreased in value, and will it rise again? Here's the forecast for this week.

At the end of January 2025, the dollar fell to its lowest point in 1.5 months. However, the situation in Ukraine's currency market is expected to change at the beginning of February.

This is reported by RBK-Ukraine citing the weekly review from investment company ICU.

According to the review, last week the National Bank took advantage of the improved balance in the currency market, receiving additional support from exporters who needed more hryvnia liquidity to pay taxes at the end of January.

Due to the decrease in demand for currency and an increase in its sale, the NBU reduced its intervention volume last week by 23% to $582 million, the lowest level since mid-November. Overall, the NBU's currency sales interventions in January amounted to $3.8 billion, which is 48% higher than in January of the previous year, analysts note.

As a result of the week, the official exchange rate of the hryvnia strengthened by 0.5% to 41.73 UAH/USD, the strongest level in one and a half months. The cash dollar rate in systemically important banks decreased by 0.4% to 41.6-42.1 UAH/USD by the end of the week.

Therefore, the NBU halved its interventions compared to the first weeks of the year, falling below the average weekly rate for the entire 2024 year.

"However, the factor of increased currency supply will disappear at the beginning of the month, while demand in the retail segment will rise due to the opening of new limits for individuals to purchase currency online. Therefore, the NBU will have to either further weaken the hryvnia or significantly increase interventions to avoid sharp fluctuations in the exchange rate," the review states.

Recall that earlier analysts from ICU predicted that the dollar rate would grow moderately throughout 2025. The devaluation of the hryvnia is expected to accelerate in the second half of the year as inflation begins to decline. As a result, the dollar rate is expected to reach 46 hryvnias by the end of the year.

It should be noted that the dollar rate has already started to rise at the beginning of February after a decrease at the end of January.