Ukraine’s hryvnia and Kazakhstan’s tenge will gain at least 6 percent by year-end as higher food prices fuel inflation, prompting the country’s central banks to allow currency appreciation, says UniCredit SpA.
The hryvnia may strengthen 6.6 percent to 7.4 per dollar this year from 7.8955 as of last week’s close, and the tenge could strengthen 6 percent to 139 from 147.3450 on Aug. 13, said Dmitry Gourov, an emerging-market strategist and economist in Vienna for UniCredit, Italy’s largest bank. Both currencies are managed by their countries’ central banks.
“High grain prices and potential for quicker food-price increases bolster the case for central banks to allow greater gains” in their currencies to reduce import prices, Gourov wrote in a note to clients e-mailed today.
Wheat prices are headed for their best month since June 2007 as Russia’s worst drought in five decades boosts prices. The drought has also affected Ukraine, the world’s fourth- largest corn exporter. Corn futures in China, the second-largest consumer of the grain, have jumped 3.9 percent this month.
UniCredit is advising its clients to bet on the currencies’ gains through six-month and one-year non-deliverable forwards, which allow foreign investors to speculate on currencies whose trading is restricted, Gourov wrote.
The hryvnia will trade at 8.06 per dollar in six months, while the tenge will be at 147.63 per dollar, according to NDFs. The hryvnia was little changed at 7.8915 per dollar by 12:54 p.m. in Kiev, and the tenge was also steady, at 147.3425 per dollar.