Does Russia's lot await Ukraine?
In only six days, from November 3 to 9, the hryvnia exchange rate at
currency exchange kiosks dropped 4.8%. In the provinces it fell even lower.
And a second fact obviously relation to the first one but of earlier date
is that the volume of circulating money in late October grew by Hr 200
million or 3.2% compared to the beginning of the month.
After giving this information, a government source added that the increase
occurred mainly in the first ten days of October and was caused by social
payments. In the following twenty days the NBU, in its own words, managed
to reduce this amount by about Hr 75 million.
As reported by The Financial Times, in late October central banks
utilize their inflation fighter status if a serious outbreak of inflation
is possible not caused by expansion by the central bank itself.
Bankers associate the sharp rise in the cash hryvnia exchange rate primarily
with growing number of hryvnias in owing to the purchase of substantial
amounts of dollars on the Inter-Bank Currency Bourse by the National Bank,
for which purpose it used emission funds. Thus, the so much talked about
inflationary spiral has lately been transferred from verbal to material
existence.
According to Interfax-Ukraine, many bankers think that the demand for
cash dollars increased due to the President Kuchma's statements about a
possible emission.
In the meanwhile, Viktor Pynzenyk, the former Deputy Premier and current
leader of the Reforms and Order Party maintains that given the economic
policy currently being pursued by the government, stabilization is out
of the question: "Ukraine has no chance to avoid an emission, for they
(the government) know of no other way of handling the problem. Ukraine
will experience a crisis similar to that in Russia even before the presidential
election."
An effort undertaken by the government in late October and earlier in
November to conduct an emission overhaul on stabilization was to no avail.
According to The Day's expert Vitaly Morhulis, chairman of the Ukrainian
Consulting Firms Association, if this experiment is continued, Ukraine
will undergo inflationary ruin of which Russia provides an example.






