Ukrainians still trust in dollar
The Ukrainian national currency promotion campaign launched last year by a number of non-governmental organizations and associations is revving up. The organizers project 2003 as the year of international popularization of the hryvnia. The organizing committee has already drawn up an appeal to the Ukrainian leadership and international organizations to support its initiative. The committee has also mapped out a detailed plan of actions for the current year. Out of these, Valentyn Khaletsky, chairman of the Non-Governmental Council of Ukraine, singled out the following three festivals: Baptism of the Hryvnia on January 19, Feast of Love for the Hryvnia on February 14-15, and participation of the hryvnia in the traditional Brands Parade n September. The popularizers of the hryvnia are inclined to consider their brainchild as a full-fledged Ukrainian brand. Therefore, its image should be put not only on souvenirs but also on other items worthy of this symbol. Mr. Khaletsky believes that a time will come when the word, hryvnia, will be associated with high Ukrainian quality (something like the Soviet-time Token of Quality).
This campaign, an integral part of Ukraine’s positive image-building in the world, is going to popularize the hryvnia mainly by way of exhibitions and presentations of this currency in Ukraine and the neighboring states, as well as by circulating souvenir-type coins mostly in the frontier and on transport. Incidentally, the series of commemorative and jubilee coins issued by the National Bank of Ukraine already comprises 120 coins, with another 22 to come out in 2003.
Yet, hryvnia advocates think that what set the popularization process into motion is the hryvnia’s successful performance as a legal tender rather than its numismatic value. As the hryvnia has been a stable and reliable monetary unit for many years, the campaign participants believe it is time to raise the question of recognizing it as a freely convertible currency. Without the slightest doubt about the viability of this idea, the popularizers are boldly predicting that in the near future the hryvnia will be firmly established “between the euro and yen zones”, i.e., “the hryvnia zone” is supposed to cover the ex-USSR territory, with the Russian ruble being no obstacle. In all probability, our national currency will have been so popular by that happy day that the word, hryvnia, will be on everyone’s lips and the ashamed economists will put aside their calculations and give in to the public will.
Meanwhile, the popularity of a currency mostly depends on its stability and solvency. So far, the population of Ukraine still prefers to trust in the foreign currency: according to the National Bank, Ukrainians bought an equivalent of $773.8 million from January 1 till December 27, 2002, although, over the same period, they sold $187.3 million more in foreign currency than they bought, which may be considered as an encouraging factor for the hryvnia.
Yet, 2003 is going to be a difficult year for the National Bank, as far as hryvnia stabilization is concerned, because there are more and more calls to liberalize the currency market. Interbanking currency market operators are not satisfied with the way bids are made. For instance, Oleksandr Zavarykhin, chief of the VABank resource regulation department, told Interfax-Ukraine that last year bids were in fact made “in the National Bank’s hands-on mode,” while Yury Maliuk, deputy director of the Credit Bank (Ukraine) treasury department, believes that “the currency market is overregulated.” Shortly after taking over as National Bank head, Serhiy Tyhypko said he intended to analyze the necessity of liberalizing currency regulation and submit this issue for the NBU Board consideration. He also noted that, even if it is decided to liberalize currency regulation requirements and, in particular, to reduce the mandatory sales quota, this will be a gradual process. Throughout the year 2002, Ukraine’s interbanking currency market showed stability, with the hryvnia gradually devaluing by 0.72% (from UAH 5.2985/$1 to UAH 5.3365/$1).
