Ukraine government and bankers agree on 12.95 UAH/USD exchange rate

Ukrainian President Petro Poroshenko and Prime Minister Aresniy Yatsenyuk met with Ukrainian private bankers on Sept. 23 and agreed to a justified UAH 12.95/USD exchange rate. Already by the end of Sept. 24, the national currency strengthened at the ForEx to the declared level, even though the exchange rate was UAH 14.7 / USD in the beginning of the day. This morning, the mid-market rate was UAH 13.15/USD.



Alexander Paraschiy: Such “manual” corrections at the ForEx are a very poor practice that was prompted by the earlier regulatory mistakes of the National Bank of Ukraine (NBU). In February, the new authorities announced a hryvnia free float because it was badly needed to develop ForEx infrastructure, giving importers some mid-term hedging instruments and giving other players clear rules on when and how the NBU will be intervening on the market. Nothing was done on the infrastructure side, and the non-interference regime ended in August when pressure from the president and parliament on the NBU head intensified.



When export proceeds slumped due to aggravated warfare near Donetsk and the hryvnia started weakening further, the NBU responded with unprecedented regulatory measures of 100% compulsory foreign currency sales for exporters and tightened requirements on the foreign currency positions of banks. In the short term, the measures created an extra supply of foreign currency on the market and bolstered the hryvnia for a while. However, within a few weeks the measure failed. Exporters delayed wiring their revenues to their Ukrainian accounts, importers rushed to purchase more foreign currency in the face of uncertainty, and the population added fuel to the fire with more individual demand for dollars.



Now we’re observing one more attempt at administrative measures. The president and prime minister asked private bankers to strengthen the hryvnia to a predefined level. On the one hand, at this stage there are few measures left to deal with the current panic. On the other hand, such unprecedented talks with bankers involving the nation’s top two officials will make the public even more nervous about the hryvnia’s prospects. The only thing we can be sure about is that the black market will be flourishing while the agreed-upon UAH 12.95/USD rate will become a privilege for select bankers.

Источник: Конкорд Капитал