The hryvnia continues to slide despite IMF loans
The National Bank's dead duck (liberalization of currency policies,
in IMF parlance) again runs the risk of crippling the NBU and the hryvnia
in general, reported The Day's Yana MOISEYENKOVA last Tuesday.
It is interesting that a couple of weeks ago the NBU management would
sit 24 hours day brooding over the controls that banks learned to bypass
a few days later. It will be recalled that, to have the dollar on free
sale and to make it impossible for us to buy it, the National Bank kept
intact mandatory sales of half their hard-currency earnings, preserved
supervision over hard-currency requisitions by tax authorities, and banned
banks from buying hard currency for exchange kiosks.
The banks have once again confirmed that the professionalism they acquired
back in Soviet times in handling any kind of moronic controls is a thing
to reckon with... When, ten "control" days later, it became clear that
the hryvnia's rate had dropped by 30 kopiykas over the time of liberalization,
the National Bank burst into a stream of bitter invective against the banks:
"The banks' actions are inconsistent with normal exchange rate formation
and lead only to destabilization." NBU Governor Viktor Yushchenko (the
official telegram was signed by him) also resented that "some banks set,
for no apparent reason, an excessive spread between the purchase and sales
exchange rates for hard currency.
"This causes an artificial and unjustifiable underrating of the national
currency rate" (yesterday's tender started with the official rate of Hr
3.93 for $1). "So the National Bank strictly warns banks about the necessity
to comply with its requirements and obliges NBU regional branches to impose
sanctions in case they detect any violations."
This means administrative regulators are being used again (although,
to be fair, one should note that the NBU is really not so wealthy as to
arrange a full-fledged feast of liberalization in this country). The NBU
is going to act despite the fact that as early as this week it expects
to replenish its hard currency reserves: the IMF Board of Governors has
unanimously decided to renew credit to Ukraine and has underwritten a new
$153 million installment. It is not ruled out that a similar amount will
also be "wrested" from the World Bank next week. But the National Bank
does not seem bent on keeping the hryvnia afloat only at the expense of
its own reserves.
"Of course, we are happy because of the loans," a currency-market novice
operator told The Day, "Ukraine will take the money, so it will
undertake to liberalize currency policy further on. And then - who knows
- the National Bank could allow speculation. Otherwise, it's so boring
here." Another operator said, while the market is "half-closed," some services
(including those of administrative bodies - Author) cost more than
they do under complete permissiveness and unlimited freedom. "This is why
those who managed to 'become useful' continue to work and do not grumble
about incomplete deregulation."






