The forecasts given by the National Bank of Ukraine (NBU) as for the stabilization of the forex market after the arrival of financial aid from international financial institutions in May came true, however, the stabilization requires consolidation and expansion of reforms, advisor to the NBU's governor Valeriy Lytvytsky says.
“Reform is needed to stabilize and strengthen the hryvnia. The results [of the reform] need to be seen,” he told Interfax-Ukraine.
The hryvnia had been weakening for over 100 days, and in the middle of April it was wobbling between 11.9-12.9 Hr per U.S. dollar, while some transactions were effected beyond Hr 13 per U.S. dollar.
“The period of the hryvnia’s free fall ended: fluctuations in May were around Hr 11.3-11.9 per U.S. dollar. This means that the hryvnia has strengthened by almost 9 percent,” Lytvytsky said, noting that funds from the International Monetary Fund arrived in Ukraine on May 7.
Over that short period Ukraine’s forex reserves expanded by about a quarter and foreign financing continues to arrive, Lytvytsky said.
April 2014 saw a surplus of foreign trade mainly due to a decline in imports, and the surplus may grow in case of the renewal of export growth, he added.
Outflows of cash outside banks are on the decline, as bank clients are not so active in withdrawing their bank deposits.
Lytvytsky noted a remarkable fiscal consolidation this year: tax collection is better and spending austerities are tougher.
