- The national currency exchange rate is a precise and sensitive index of the citizens’ trust in the economy and the power’s actions. Hryvnia’s current ‘slump’ is a fair estimation by the people of the Tymoshenko government for its failed and unprofessional economic policy.
The following saying has become popular recently: when the government’s head assures of hryvnia stability, of the economic grounds for its higher exchange rate and convinces the people in holding savings in the national currency, one should anticipate another surge in instability on the currency market soon.
The same is seen at the moment. On July 26 of the current year, Yu. Tymoshenko on air of ICTV channel said that hryvnia exchange rate should be at a level of 6-6.50 UAH/USD, and the responsibility for the present exchange rate falls completely on the National Bank. Simultaneously she tried to misinform the people again, totally denying her participation in undermining of the national currency’s stability.
At that time the situation is absolutely opposite. Over the past two weeks of July 2009, hryvnia exchange rate against foreign currencies has significantly decreased. Particularly, hryvnia has fallen by 33-36 kopecks against USD, - from 7.67-7.76 UAH/USD (bid and ask accordingly) to 8-8.12 UAH/USD as of July 28, 2009, i.e. almost by 5% down.
The true reason of hryvnia instability is that the Yu. Tymoshenko government lost control over the processes in financial sphere and systematically solves the budgetary troubles by means of money emission.
It is clear for everyone, except perhaps for the Yu. Tymoshenko government, that the Ukrainian economy experiences a fiscal crisis. It is faced with menacing peak of foreign debts reimbursement, increasing balance of the payments deficit. All this promises hryvnia’s exchange rate no well.
The situation is aggravated by the expenses for increasing of equities in the state banks and NAK Naftogaz Ukrainy, nationalization of bad banks, etc. which are financed by emission of internal state loan bonds. To put it shorter, by means of money printing.
The Party of Regions Press Service
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