IT companies demand stopping dollar rate scams

The IT Ukraine association has urged the National Bank of Ukraine (NBU) to make an inquiry into dollar rate scams to which banks resort when exchanging hard currency, as the association’s press release says. “A lot of IT companies have come across instances when banks sold the earnings under export contracts at a rate different from the interbank one. According to the companies’ information, banks underrate the dollar by UAH 1-1.5 compared to the interbank currency sale rate. The banks justify these actions by some “verbal instruction” from the NBU to sell the currency within a “currency corridor.” At the same time, this currency is afterwards sold on the interbank market at a more realistic rate,” the IT Ukraine’s release says. The association believes that if there really is an instruction like this, it does the economy direct harm and creates a good breeding ground for corruption. “If the banks’ accusations against the NBU are groundless, the latter should figure it out, urgently issue a relevant letter, and deny these rumors.” IT Ukraine has also filed this request to parliament’s special committees and association of banking market participants.

 It will be recalled that IT exports from Ukraine in 2013 reached an estimated 1.8 billion dollars. This year, growth in this sector has dropped fivefold, with many companies having to close down due to the hostilities and political instability. A month ago, Dmytro Shymkiv, Deputy Chairman of the Presidential Administration, presented a number of deregulatory reforms to develop the IT sector, which included liberalization of foreign economic activity and bank payment forms.

 Anatolii Hulei, board chairman of the Ukrainian Interbank Hard Currency Exchange, believes that there are no scams mentioned above. In his opinion, banks either buy hard currency in reserve or sell it on the interbank market at the rate of the day, adding 0.5 percent to the price (Pension Fund allocations) and their commission. “Some banks simply earn their commissions, so the difference can reach 1 hryvnia. This means, in approximate terms, that, for home transactions, banks purchase hard currency at UAH 13.5 per dollar and sell it for UAH 14.5. But this is hypothetic. We cannot say that all banks do so. It is only some of them, which have no reliable sources of revenue. These are isolated cases, not a system,” he says. The expert is sure that banks are acting within the legal limits.

 Mr. Hulei believes that, as far as exporters are concerned, the NBU should pay attention to another issue – returning cash under the previously concluded contracts. “I would audit all the foreign currency contracts for the past 6 months, which left Ukraine and have not yet returned. I would check the legitimacy of taking them abroad from February 2014 onwards. I am sure lots of obstacles would be found, which prevent these funds from returning on time,” he notes.

 Revenues from exporters cannot cover the foreign currency shortage in Ukraine. “To be united in struggling for the hryvnia stability and economy in general, the exporters need to be not only pressed upon, but also met halfway. The exporters’ opportunities are currently limited due to a slump in output, while expectations of their earnings are obviously exaggerated. And where will revenues come from if 30 percent of the Ukrainian economy has collapsed and this share keeps on growing? This is why one should not set additional requirements but be unbiased,” Mr. Hulei stresses. He thinks it is good that the NBU has started to realize this and taken some more balanced actions. In particular, it has reduced the share of mandatory hard currency sale from 100 to 75 percent. “In future, it should be reduced to 50 percent,” he points out, adding that business is waiting for a UAH 12.5-13.5 per dollar currency corridor.

 The economist Andrii Novak believes that exporters must be motivated to work. In their case, the motivation can be bringing the foreign currency market to order, fixing the rate, or at least setting up a corridor aimed at strengthening the hryvnia, introducing clear reservation norms for commercial banks and refinancing. Only then will economic entities see that the situation is within the limits of unified, transparent, and systemic rules of the game. Otherwise, businesspeople will not be motivated to work legitimately,” Mr. Novak explains. Nowadays, business cannot see this, as the NBU has, for some reason, stopped performing its regulatory function, Mr. Novak thinks. So, everyone on the market pursues the same objective – the profit.