Oleksandr Klymenko Official website
Articles | 145 | 10.01.2017

What is hryvnia sick with and what will be the dollar exchange rate?

The hryvnia fell immediately after the New Year’s Day. On the eve of Christmas Day, it has chosen the allowable backlash within the frames of official corridor.

The dollar’s exchange rate has increased up to UAH 27,2 in Internal foreign exchange market. It has reached UAH 28,2 in currency exchange offices.

What is the true reason for it and what should we expect from hryvnia in future?

Unfortunately, we should not expect for the strengthening of hryvnia. It does not come about patriotism. It is just not beneficial for current government to have a strong currency.

When the economy is not growing, and the budget has much more holes than Swiss cheese, it can be plugged up with the devaluation of hryvnia and its fellow traveller called inflation. Thus, a printing press will be operating.

Here is a simple instance.

Firstly, do you remember UAH 25-26 per dollar last summer? Was it possible to strengthen the hryvnia at the level of 24? Yes, it was. However, the National Bank of Ukraine did not make such step. Instead, it came out in Internal foreign exchange market and bought the dollar in order to inflate the exchange rate. This time, it will do the same. It will gradually collapse hryvnia.

Secondly, hryvnia devaluates a complex of unfavourable factors: necessity to buy gas and coal, which is paid in «evergreen» currency by Ukraine, the absence of revenues from agrarians and high-tech industries (in fact, there is no such industries), closure of banks – and, most importantly, removal of hryvnia mass from the PrivatBank by Ukrainians with its instant conversion into the dollar.

Finally, Ukraine should not expect for loans from international “partners” in the foreseeable future. In its turn, the IMF promised to consider the issue.

What will happen next? If we talk about optimistic forecast, it will be possible to hold back hryvnia at the level at 28,5 per dollar by spring. After that, national currency will be restrained by exporters in agrarian field.

However, the psychological barrier of UAH 30 per dollar will probably be crossed by fall.

This is the rubicon: if our national currency crosses it, there will be irreversible processes”

According to the pessimistic forecast, it will not be possible to hold back the hryvnia at the level of «30» per dollar even in spring due to the fact that external economic crisis puts pressure on national currency.

The leadership of the country does not have «plan B» in such case. Thus, nobody will stand up for Ukraine.

The hryvnia will be collapsing. By April, Valeria Gontareva will present the public one thousand-hryvnia note. By August, we will need for ten thousand-hryvnia note

I would like to believe that the government will choose the best possible way. In particular, they will resign and provide professionals with an opportunity to carry out exchange rate policy and state management as a whole.

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