You're reading: No danger for stability of hryvnia exchange rate, says advisor to NBU governor

There are no fundamental threats to the stability of the hryvnia exchange rate, Valeriy Lytvytsky, the head of a group of advisors to the governor of the National Bank of Ukraine, has said. 

“The NBU governor has said several times that we’re sticking to a policy of maintaining a stable exchange rate based on fundamental factors, which does not mean a fixed rate, and it allows for slight, short-term fluctuations caused by situational reasons,” the advisor said.

He said that the situation on the currency market is under control and it is in line with the said stability policy with its moderate flexibility.

“The exchange rate is manageable, and it is no fixed, but this is manageable floating,” Lytvytsky said.

He added that such exchange rate fluctuations are not exclusively an autumn factor – they have occurred before. In particular, the market began August at UAH 8.10/$1 and ended at UAH 8.05/$1, counter to the forecasts of some experts.

He said that on September 4, 2012, the average hryvnia exchange rate to the U.S. dollar calculated by the NBU, taking into account all data and using modern methods came to UAH 8.09/$1.

“One should get accustomed to flexibility trends with the retaining of the basis for stability of the exchange rate,” Lytvytsky said.

He again said that at present the NBU does not see a danger to exchange rate stability.

“The basis of the medium-term strength of the exchange rate is large,” he said.

Lytvytsky said that economic growth is at 2%, inflation is at its lowest over the years of its calculation, and one of the lowest in the world, the budget deficit is not going beyond the forecast limits, and the balance of payment recently showed a net inflow, while its gap over first seven months of 2012 is minimal, at $300 million.

“In August, the surplus of NBU’s interventions exceeded $400 million. We’re again expanding currency reserves, which are at $30 billion,” Lytvytsky said.

The expert said that there is an effect from the seasonal increase in demand for foreign currency, and an effect from devaluation expectations, heated up by election campaign and some journalists.

“We know the market, and we have a lot of experience. We know when we have to use the big guns and when we have to use a softer approach. We don’t see grounds for surgery, but vigilance is heightened,” Lytvytsky said.