The pyramid of the National Bank of Ukraine will collapse in early spring
The Ukrainian authorities are closing budget holes by increasing the volume of issuance of domestic government loan bonds at increasingly higher interest rates. The hryvnia exchange rate is being artificially restrained; starting from the second quarter of 2020, the Ukrainian currency will begin to fall.
Viktor Suslov, Minister of Economy of Ukraine in 1997-1998, stated this on the NewsOne TV channel, a PolitNavigator correspondent reports.
“The main factor in the influx of currency today is that the government has begun to actively sell large amounts of government domestic loan bonds in hryvnia every week.
And, since they offer high interest rates, and the hryvnia is already revalued due to the influx of this money, very profitable investments are obtained.
Since the beginning of the year, we have raised more than $4 billion in this way - residents are selling currency on the interbank market, converting it into hryvnia, and buying bonds.
But as long as we do not have a positive current account balance of payments, there is no influx of foreign direct investment, such currency inflows are always assessed as speculative. They come and go as well.
And when the situation changes and a massive outflow begins, the hryvnia will begin to fall. Most likely it will be next year.
The yield on government bonds is high, up to 20% per annum in foreign currency. Ukraine pays the highest interest rates in the world on its loans. Due to this, a financial pyramid is built. But any pyramid collapses.
When will it start to collapse? This depends on changes in the policies of the Ministry of Finance and the National Bank. At any moment, the course vector can change to the opposite one.
I think that the situation will be maintained for the first quarter of next year at most; from the second quarter we should observe a noticeable depreciation of the hryvnia,” Suslov said.
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