Hryvnia Knocked Down By Gasoline
Inflationary expectations also influenced devaluation
The hryvnia-dollar exchange rate, which substantially dropped last Tuesday,
also continued to fall on Wednesday, crossing the line of UAH 4.10 on the
interbank market. Dollar prices at exchange bureaus have risen by an average
10-15 kopiykas.
The significant devaluation of the hryvnia promoted the growth of rates
on the interbank credit market, where the price of resources, as Interfax-Ukraine
reports, shot up twofold from 4-6% on Monday to 10-12% (overnight rate).
Most experts attribute the fall of the hryvnia to price hikes for oil
products. Director of Raffeisenbank Ukraine Serhiy Manokha believes, "Gasoline
prices have doubled. This causes inflationary expectations, and then the
hryvnia has to be devalued."
Chief of interbank operations at the Nadra Bank Serhiy Borysov, according
to Interfax-Ukraine, does not rule out that the abrupt tremor in the exchange
rate might have been caused by "certain actions of a certain group of banks."
However, by Wednesday, the Nadra Bank refused to comment on the current
situation.
Deputy chairman of the board of governors of the Finances and Credit
Bank Vadym Chankin told The Day's correspondent, "Inflation expectations
always occur in August. What is more, they become a beneficial psychological
factor in the presidential election campaign. This in fact has given the
market some momentum. But I think quotations will roll back from their
peak, as the National Bank is sure to bring into play the regulatory mechanisms
it used as long ago as last September. However it is too dangerous to make
predictions today. It is common knowledge the coming fall will be very
active from the business standpoint. And no one knows what turn events
will take. The point is in the mentality of business people. If official
sources keep prattling that they are certain to maintain a stable hryvnia,
this causes a certain crack, a crisis of confidence."
Mr. Chankin also pointed out that the government's attempts to revitalize
the oil product market in Ukraine by means of privileges is like beating
a dead horse or trying to catch up with the train that just left. "I have
just been to Kremenchuk, and I saw that the oil refinery stands idle as
do other similar plants. So when should we run after loans, and when will
this oil be delivered, refined, and sold?"
A minute after the interview with Mr. Chankin, The Day received
a call from National Bank spokesman Dmytro Rikberg who stressed, in speaking
about gasoline, panic, and psychological factors, that the financial market
is quite all right. This can be interpreted as National Bank commitment
to bring the hryvnia back to its place.
Meanwhile, the fall of the hryvnia immediately told on essential goods
in the provinces. As The Day's Mykhailo VASYLEVSKY reports
from Khmelnytsky, cigarettes immediate showed a 30% price jump. The dollar
has vanished from kiosks, and illegal moneychangers have reappeared. The
dollar sells at UAH 4.70 on the black market. In addition, the man in the
street thinks this is only the beginning, for no one expects gasoline prices
to go down now.
INCIDENTALLY
The most effective hryvnia-gasoline fire extinguisher has been invented
by Leonid Kuchma who struck a deal with a Greek multimillionaire Vardis
Vardinoiannis on the supply of a million tons of light oil products to
Ukraine.
As the chief representative of the Vardinoiannis Group in Ukraine Ioannis
Litinas informed The Day, the contract on delivery of the oil products
was signed by the Ukrnaftoprodukt holding company under guarantee of the
Cabinet of Ministers which urgently passed the needed resolution. The first
30,000 tons began to be shipped on July 24 to the Feodosiya oil terminal.
Mr. Litinas said the latter would have to receive "four tankers a month,
i.e., about 100,000 tons. The same quantity of fuel will also go to Odesa."
He declined to reveal the price, referring the question to Ukrnaftoprodukt,
but he noted the contract stipulated 7 to 30 days for delivery.
We were told at Ukrnaftoprodukt that the price of the fuel being supplied
is oriented toward the world price of $165 (SIF) per ton. The person who
spoke with The Day noted, "We simply won't be able to handle" supplies
valued at as many as a billion hryvnias (1 million tons), since Ukraine
in fact does not need that much.
The fire extinguisher designed by the government to simultaneously save
the hryvnia and the harvest seems to have been brought into action too
late, which can only bring new losses and debts.
PS: Viktor Yushchenko was asked at the press conference about
possible political causes for the current hryvnia decline. He answered
evasively, saying he needed allies in the struggle for a stable hryvnia
and regards the press as such. Then who are the enemies?
By Vitaly KNIAZHANSKY, The Day







