The National Bank warns of a landslide devaluation and advises to keep the hryvnia in the current regime for no more than a month.
Half of the decision of the National Bank, which was partially, only for cash transactions, abolished the fixed exchange rate of hryvnia to the dollar, creates a risk of overvaluation of the real exchange rate with subsequent collapse devaluation . This is stated in a statement by analysts of the Economic Expert Platform, which is available to the editors.
Thus, experts have concluded that Ukraine needs to abandon the multiple exchange rate regime introduced last week by the NBU as soon as possible.
They insist on moving to a flexible exchange rate model during the month and developed a series of recommendations that will allow the summer to converge on three exchange rates (official, commercial, “black”) in the currency “corridor” 31–34 hryvnia per dollar.
“Multiple exchange rates are considered bad practice because they distort markets and lead to major abuses. In addition, the market rate under the multiple regime is usually inflated due to lack of supply of currency, which further exacerbates the distortion “, – experts say.
It is emphasized that the use of such regimes is allowed only for a short period of time and in exceptional circumstances, such as full-scale war.
“As such, the multiple exchange rate has already played a positive role in the first weeks of Russia's full-scale war against Ukraine, when the danger of currency panic was real, especially against the background of general uncertainty about the situation. But one of the disadvantages of this regime is the risk of getting out of it, which increases over time – the longer the fixed or multiple course, the deeper the distortion, the harder and riskier to move to floating exchange rate formation, “- say experts.
Experts of the group of analytical centers of the Economic Expert Platform have developed detailed recommendations for resolving the situation, which include the following steps:
- The fixing of the exchange rate played a stabilizing role in the first months of the full-scale war, when panic was on the rise. But the delay in liberalizing the exchange rate creates the danger of overvaluation of the real exchange rate with a subsequent avalanche of devaluation, such as the events of 2014-2015.
“In this matter we can count on the understanding of our foreign partners and the IMF. Appropriate assistance needed to balance the foreign exchange position is not a big problem for these countries , compared to the losses they risk to suffer in the event of Ukraine's loss. In particular, a decision was recently made on assistance from the United States in the amount of 8 billion dollars. precisely to support the budget of Ukraine. Similar assistance comes from other partner countries and the IMF, “the recommendations said.
- (but not more than a month) , you need to set a mode that causes less damage and allows you to gradually return to flexible course formation. Namely:
– to allow the sale of foreign exchange earnings to exporters at the commercial rate with a gradual increase in this share;
– leave the possibility of credit/deposit card payments and cash withdrawals abroad at the official NBU exchange rate (+ 10%) within the equivalent of UAH 50,000/month , and only allow banks to apply a commercial exchange rate above this amount, but without restrictions for amounts.
– as an accompanying measure – return to the normal mode of operation of VAT as soon as possible, with its payment when importing goods and services (but without duties and other additional payments) , which will reduce the demand for currency.
It will be recalled that a few days ago the National Bank lifted the restriction by a resolution of the NBU №102, according to which authorized institutions could sell cash foreign currency to customers with a deviation from the official no more than 10%, thus introducing multiple exchange rates. Ukraine.
The abolition of restrictions on the exchange rate applies only to the cash foreign exchange market.
According to the NBU, the cash market is now mostly bought currency for speculative earnings, financing of “gray” imports, which is not critical, as well as the transfer of savings in foreign currency.
The NBU also believes that this decision minimizes” card tourism “.
” According to available data, significant A part of hryvnia card transactions abroad is cash withdrawals from ATMs, a significant part of which is then returned to Ukraine and enters the illegal cash market. Therefore, equalization of conditions of direct (through cash transactions) and indirect (through card transactions) purchase of currency, in Ukraine and abroad, by the population is a measure that will prevent unproductive withdrawal of capital and protect international reserves Ukr Ainu “, – it is said in the explanation of NBU.
