The hryvnia strengthened for the third consecutive trading session -- on Wednesday it rose another 0.4% to 26.6362 USD/UAH. The Ukrainian currency already gained 1.2% against the greenback this week. The key driver of appreciation was excess demand for the hryvnia in the domestic FX market, as investors began preparing for third quarter tax payments which start next Monday. Meanwhile, banking sector liquidity fell to the second lowest rate this year (see comment on liquidity), which also increases demand for the hryvnia. In the Ukrainian cash market, the hryvnia sold for 26.72 USD/UAH versus 26.89 to buy. Its CPI-based real trade-weighted index rose 0.10% to 106.676; in year-on-year terms, it is down 2.96% from 109.93 last year.