Physical persons faring well, says National Bank
The official exchange rate of $1.00/UAH5.05 is the optimal choice, announced National Bank of Ukraine head Volodymyr Stelmakh on September 15, adding that the NBU does not have sufficient grounds to alter it. Next year, the NBU’s board plans to keep the annual exchange rate at UAH5.0 - 5.20. Mr. Stelmakh predicts that this range may entail a degree of political instability. The NBU head emphasized that the central bank’s exchange rate is a minor issue. “It’s one of the factors we’re using to secure the national currency’s buying capacity,” said Mr. Stelmakh, adding that economic growth is maintained only by a stable national currency, and that at this stage the exchange rate is the main inflation-containing factor.
The NBU head firmly believes that the outward strengthening of the hryvnia rate is the right decision. He is absolutely convinced that no one has suffered any losses because of this sudden move. Mr. Stelmakh also believes that no losses have been experienced by holders of foreign exchange deposits, for whom the exchange rate difference is compensated by the interest rate. (It should be noted that a number of banks never thought of raising the foreign exchange deposit rates). Ukraine’s premiere banker is especially optimistic about the expected 5-percent dollar inflation rate. “For those citizens who wish to obtain bank loans to undergo medical treatment abroad, this will cost less, at least by 5 percent,” says the banker, rejoicing for his fellow citizens. Those who took foreign exchange loans earlier are also on the winning side; over the past three months loans totaling $32 billion have been repaid. Mr. Stelmakh notes that loans have dropped by 9 percent.
The NBU head proposes to take another look at the problems of exporters. “I don’t understand one-sided patriotism; why should those who export goods from this country and import other goods, hard currency, be regarded as patriots?” Mr. Stelmakh asked rhetorically. He has his own explanation of why exports have lately increased only by 9 percent and imports by 22 percent; it appears that “we’ve had a lot of ‘shadow’ imports.” This is confirmed by the results of conformance inspections carried out in Ukraine and abroad. In the last year alone our business partners failed to validate $1.4 billion worth of commodities exported from Ukraine. The same is true of imports; our partners abroad imported goods to Ukraine worth $2 billion more than our statistics show.
NBU estimates show that the inflation rate will be 12 percent in 2005, with NBU foreign exchange reserves reaching almost $14.5 billion, and by another $3 billion in 2006, mostly by utilizing hard currency that the Ukrainian government is receiving from the World Bank and other international financial institutions. The NBU head also noted that in 2006 the central Ukrainian bank’s monetary policy will envisage a substantial increase in refinancing specific economic projects.
