Kernel concluded the first for Ukraine non-deliverable forward

In late November, one of the Ukrainian banks and the Kernel company concluded the first non-deliverable forward (NDF) in the history of Ukraine, Interfax-Ukraine reports.

"This is the first transaction on hedging of currency risks of the kind in the Ukrainian market. Previously, agreements with foreign exchange forward contracts were also concluded in the market but their share is still insignificant and has great potential for growth," the National Bank of Ukraine (NBU) said in a statement.

Oleg Churiy, Deputy Governor of NBU, noted that spot transactions in the foreign exchange market, i.e. those that are actually carried out on a daily basis, account for no more than one-third of the total volume of the foreign exchange market.

"The rest are operations involving hedging instruments: forwards, futures, swaps. Unfortunately, in Ukraine it is the other way around: spot transactions dominate, and cases of hedging currency risks by business are still rare," said Oleg Churiy.

In his opinion, in the conditions of volatile exchange rate business owners and financial officers should pay attention to the hedging instruments already available in Ukraine. Among those are, in particular, outright forward and non-deliverable forwards that can be concluded with banks for export and import transactions or loans from non-residents.

"For four years now, Ukraine has been living in conditions of flexible exchange rate formation, which allows avoiding accumulation of imbalances in the economy, but also requires the business to plan carefully," said Oleg Churiy.

As a reminder, Kernel was the first in the financial market of Ukraine to conduct a hryvnia-dollar currency swap transaction.