Economists: The rate of hryvnia depreciation is a record even for Africa
Kyiv, April 14 (Navigator, Vladimir Mikhailov) - The current exchange rate of the hryvnia is a “merit” of the authorities and the leadership of the National Bank, and there are all the prerequisites for the fact that inflation and devaluation will only accelerate, economists say.
The fall of the hryvnia to an exchange rate of more than 13 UAH per dollar did not occur as a result of any external factors, for example, the actions of Russia, but because of the mistakes of the government and the policies of the NBU. This opinion was expressed at a press conference by the ex-deputy chairman of the NBU, rector of the International Business Institute, Alexander Savchenko.
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“This government has refused to control the stabilizing parameters - emissions, exchange rate and inflation. Under such conditions, destabilization is inevitable,” he said.
In his opinion, if the leadership of the NBU had professional people, the rate could easily be stabilized and even lowered to 11-11,2 UAH per dollar. According to the calculations of Alexander Savchenko, the equilibrium rate at which it would be possible to maintain a normal export-import balance is now about 10 UAH per dollar. “Everything above is an artificial situation created by the authorities,” the expert believes.
In his opinion, the more the market rate differs from that dictated by purchasing power parity, the worse the government works. “If the intellectual potential of our financial authorities were at the level of the American ones, the exchange rate would be about 4 UAH per dollar. The fact that the government managed to bring the exchange rate to 13 UAH per dollar is an absolute record not only for developed countries, but also for Africa,” the expert believes.
Unfortunately, processes are currently taking place in the financial sector and economy of Ukraine that only push up the devaluation of the hryvnia and inflation, says former Minister of Economy of Ukraine, President of the Center for Market Reforms Vladimir Lanovoy.
In his opinion, the government, by printing money and accelerating inflation, seeks to increase the revenue side of the budget, but this measure will only give a short-term effect and very bad consequences.
“The economy will fall into the abyss,” the expert believes.
All economic entities are beginning to expect an acceleration of devaluation, which has a catastrophic effect on their work. Banks speculate in foreign exchange markets, exporters delay foreign exchange earnings, and local producers preemptively raise prices for goods taking into account future inflation. The hryvnia in the hands of the population is rapidly depreciating, and foreign currency in the accounts of individuals and enterprises is strengthening.
According to Alexander Savchenko, now about half of the foreign currency earnings of enterprises, which is several billion dollars, remains abroad - with such a devaluation, it is unprofitable to quickly transfer these funds into hryvnia. “The flight of capital from the country is a sign of unprofessional government,” the expert believes.
Accelerating inflation leads to the shutdown of enterprises, a drop in investment and the impossibility of long-term spending, for example, construction. According to Vladimir Lanovoy, over the past two months the decline in the construction industry was 10%, in industry - 5%, passenger traffic decreased by 9%.
According to experts, things will only get worse. Vladimir Lanovoy compares the current situation with 1992, when inflation reached record levels. “At the beginning of 1992, no one expected that the national currency would fall as much as it did by the end of the year. My forecast under the current government and the leadership of the NBU is very pessimistic,” says the expert.
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