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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Specter of Communism Haunted Currency Trade Band

16 November, 1999 - 00:00

Last Thursday the National Bank (NBU) established the official hryvnia exchange rate at the level of UAH 4.6138 to $1, which goes outside the currency corridor of UAH 3.4-4.6 introduced in February 1999. This is for the second time this year that the hryvnia surpasses the upper limit of the corridor (in August the hryvnia dropped to UAH 4.6872 to $1).

At the same time, the National Bank is still forecasting a strengthened hryvnia exchange rate after the runoff. As Serhiy Yaremenko, director of the NBU currency regulation department, told Ukrayinski Novyny, the interbank rate could rise to UAH 4.60/$1 after the election if the latter goes under an “optimistic scenario.” In his words, the supply of hard currency on the interbank currency market has dwindled by 10-15%, while demand has risen. Mr. Yaremenko said the share of hard currency purchases had been about 30-40% of the total demand the week before last, which was caused by an unstable political situation and banking speculation.

A similar statement was made earlier by Economy Minister Vasyl Rohovy to Interfax-Ukraine. He believes that should Leonid Kuchma win the elections the hryvnia’s exchange rate will return to within the limits of the currency trade band. Should the Communist leader Petro Symonenko win, “the situation on the currency market,” Mr. Rohovy believes, “will be fundamentally destabilized.”

On November 11, the hryvnia’s average cash-market purchasing and selling rates in Kyiv were UAH 4.90/$1 and UAH 5.01/$1, respectively. The impossibility of buying hard currency in exchange kiosks has brought back the black market with a rate of UAH 5.2- 5.3 to $1.

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