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Sunday, August 14, 2022

Ukraine devalues ​​its currency by 25%

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The National Bank of Ukraine (NBU) has set a new official exchange rate of 36.5686 hryvnia per dollar, a 25% devaluation from the official exchange rate the country had maintained since the beginning of the war, as reported by the institution that tightened its measures to protect the country’s foreign exchange reserves.

The Central Bank of Ukraine has explained its decision on changing the basic parameters of the Ukrainian currency during the war and strengthening the dollar, noting that the measure will improve the competitiveness of Ukrainian producers and level exchange rate conditions for different groups of businesses and households and will support economic resilience during the war.

Likewise, given the conditions of great uncertainty caused by the war, he defended the maintenance of a fixed exchange rate against the dollar, pointing out that the fixed exchange rate, in terms of the “green ticket”, is the main anchor for stabilizing expectations and the key tool for achieving the priority Goals of the NBU, which include maintaining financial and price stability.

In addition, he assured that Ukraine’s international reserves are sufficient to ensure exchange rate stability, taking into account the prospect of receiving international financial aid, the gradual construction of export logistics, the increase in exporters’ sales and the expected decrease in foreign currency demand after the exchange rate adjustment.

“The fixed exchange rate mechanism is the stabilizer of the economy in the current conditions,” assured NBU Governor Kyrylo Shevchenko, for whom the new exchange rate level will become the anchor of the economy and make it more resilient in times of uncertainty.

“Keeping the fixed exchange rate will allow the NBU to control inflation dynamics and support uninterrupted functioning of the financial system. This is the key condition for the stable functioning of the economy, which is crucial during the war,” he said. approved.

Likewise, the Central Bank of Ukraine estimates that a change in the exchange rate will increase inflows and thus the sale of foreign currency earnings by exporters, minimize speculative behavior of market participants and allow exchange rate expectations to stabilize.

To balance supply and demand in the foreign exchange market, the company has announced that it will take some additional measures aimed at “minimizing the allocation of international reserves to non-priority wartime spending.”

“The NBU closely monitors the stability of the exchange rate and takes the necessary measures to balance the foreign exchange market,” Shevchenko added, stressing that all restrictions imposed at the beginning of the war are temporary.

Source europapress.es

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