sharp jumps of the dollar in July-August vacation spoiled many Ukrainians. Instead of enjoying a full rest, they ran between the exchange points and thought about whether to buy the dollar at 8,90 UAH. or wait a bit - and suddenly the prime minister was right, and the dollar will soon be fair cost 6,50. Thus, the persistent talk of experts and politicians about the imminence of a sharp devaluation of the hryvnia fall (10, 12, and can, as never can tell, and up to 15 hryvnia to the dollar) led to the calendar paradox: on the interbank market fall came in August.
On the one hand, the increasing deficit in balance of payments (it reached 8.2 billion dollars in January-July this year) foolish talk about revalvatsionnom capacity of the national currency and the strengthening of the hryvnia to 7.60 was of a pronounced seasonal in nature, supplemented by administrative efforts of the NBU.
the other - further massive currency devaluation is unlikely, taking into account such factors as has already occurred on a sharp correction of the trade balance, a gradual improvement in external trade conditions, high rates of rollover of foreign debt and financial support from the IMF.
In particular, gross foreign reserves of the NBU are at a fairly high level - with the recent receipt of $ 1.6 billion from the IMF under the program of redistribution of quota countries - members of the fund. Reserves currently account for 28.9 billion dollars this way, the National Bank still is considerable scope for intervention in currency markets by the end of the year (though still limited, and quantitative criteria set by the IMF) to avoid too sharp exchange rate fluctuations .
According to our estimates, the last episode of weakening the national currency is linked, first of all, with a sharp increase in demand due to increased devaluation expectations of the population. Fuel to the fire, apparently added the payment of deposits and the beginning of problem banks, passed into state ownership, since a significant proportion of elapsed time for a moratorium contributions be sent straight to the currency market. Also, according to observations of bankers, significantly increased the demand for foreign currency by private entrepreneurs, employees, primarily in the agricultural sector: the proceeds received, they immediately exchanged all the available funds for foreign currency.
These findings are confirmed by the balance of payments. In July, the amount of cash foreign currency outside the banking system grew by 1,073 million (compared with 283 million dollars for the three previous months combined). In July, there was also a sharp increase in imports (by 23% compared to June), which led to the rapid growth of trade deficit. However, almost half of the growth of imports in July due to increased volumes of purchases of gas by Naftogaz of Ukraine (with 1 billion
up to 3,2 billion cubic meters), that does not create pressure on the exchange rate, as well as the purchase of foreign currency to pay for imported gas does not pass through the interbank foreign exchange market.
Nevertheless, it is worth noting that some recovery in domestic demand is also partly influenced the exchange rate in July. For example, imports of engineering products increased by 21% compared with June.
At the same time, despite the improvement in exports (the gradual recovery in external demand for steel, the beginning of the season exports of agricultural products), the supply of foreign currency is at a low enough level. Exporters holding back in anticipation of revenue more profitable course for sale.
rapid jump in the dollar forced the NBU to seek regulatory measures to reduce the rush on the currency market. First, according to the National Bank, the excess liquidity in the banking system weighs on the currency market. Therefore, over the past two months NBU significantly tightened reserve requirements for banks, which led to a decrease in the level of excess liquidity from 10-12 to 3-4 billion UAH. Secondly, the regulator, as usual, not averse to resorting to administrative measures, such as a ban on charging commissions for currency exchange operations, the establishment of a maximum margin between the buying and selling rates of cash, the establishment of a single intra-exchange rates and a ban on its change during the operational Day etc. Although the experience of the last quarter of last year clearly shows: the imposition of administrative restrictions on the foreign exchange market is inefficient. A cherished in the depths of the NBU idea of paying interest on foreign currency deposits in UAH capable of provoking panic among the population and lead to further growth devaluation pressure on the national currency.
In this regard, I would like to note a number of measures that at the moment could be effective. First, to ensure a steady flow of foreign exchange earnings seems advisable to introduce mandatory regulations on the sale of 50% of export earnings. Secondly, the significant role played by the policy of NBU on the interbank market, including such steps as increasing the transparency and predictability of foreign exchange intervention and the lifting of restrictions on access to bank interventions. (To date, banks are not complying with the limit open foreign exchange position and does not adhere to their foreign exchange operations, the so-called market average (defined by the NBU) course, are not permitted to the intervention of the National Bank.) In this respect, of the last week of auctions to sell foreign currency to meet the needs of legal persons (who were allowed banks, previously excluded from the intervention) can be considered a step in the right direction. Thirdly, the importance of communication policy, as it is obvious that the ill-conceived, negative comments only intensified the pressure on the currency market.
is noteworthy that at present Ukraine - the only country in Eastern Europe, where the dollar continues to rise. Most Eastern European currencies in the second and third quarters of this year has strengthened against the dollar, having played, thus the lion's share fall at the end of the past - the beginning of this year. Given the gradual recovery of the global economy and a recovery in global financial markets, forecasts of exchange rates in Eastern Europe before the end of the year quite favorable. Based on these regional trends, it is not clear what can lead to a further drop in exchange rate of Ukrainian currency.
In particular, due to massive devaluation of the hryvnia to the currencies of major trading partners, as well as falling real wages (for example, in July decreased by 10% annualized) competitiveness of Ukrainian exports has risen dramatically. The calculations on the dynamics of the real effective exchange rate shows that after a significant revaluation in 2004-2008 (due to extremely high inflation in Ukraine), the real effective exchange rate (REER) in 2009 would devalue by about 20%, returning to the 2004 level.
sharp rise in the price competitiveness of Ukrainian economy significantly increases the potential for export growth and attracting foreign investment. However, aprerequisite for the realization of this potential is to carry out structural and macroeconomic reforms. For example, it is obvious that even a sharp reduction in production costs in Ukraine compared to other countries in the region is not in itself lead to an increase in foreign direct investment, if not addressed such issues as judicial reform, enforcement of property rights to land, simplifying the regulatory system etc. An important element in maintaining competitiveness is also low inflation at least up to 5-7% per year, which requires fundamental changes in fiscal policy, as well as the improvement of antimonopoly regulation.
In conclusion, we note that one of the possible scenarios of development of Ukrainian economy in the coming years may be a mirror repeat situation in the early 2000's, when, after the massive devaluation of the nominal exchange rate is fixed at a new, devalued level, which leads to a sharp increase exports, accompanied by high inflation, but at the same time reduces the incentives for structural reforms. Given the scope of the export lobby in Ukraine, the probability of realization of this scenario is quite high. However, one should always remember that, to some disastrous results this has resulted in the fourth quarter of last year.
Dmitry Sologub
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