How LOW can it go?
Ukraine's hryvnia slid to a new historical low of UAH16.05 to the dollar at the close of November 12 on the interbank market. This marks a 50% devaluation on the UAH8 to the dollar exchange rate propped up by former president Viktor Yanukovych from 2010 through to his ousting in February 2014 - at the expense of the nation's hard currency reserves.
On November the National Bank of Ukraine reacted by deciding to raise the discount rate from 12.5% to 14.0%, partly to prop up the forex market. According to Valeriya Gontareva, head of National Bank of Ukraine (NBU), the central bank intends to fully switch to flexible exchange rate policy and inflation targeting.
Today's crossing of the psychological UAH16 to the dollar mark will not be the end of the descent, top NBU officials warned. "A balanced hryvnia exchange rate will come into being when the currency stops devalution," Serhiy Ponamerenko, the NBU's head of currency operations told newswires on November 13.
"Unfortunately, it is impossible to judge where the slide of the hrvynia might stop," says Dmitry Boyarchuk, executive director of thinktank CASE Ukraine. "If you look at the fundamentals, then there is no need for further weakening of the hryvnia. The problem is that the country has lost confidence in the leadership of the NBU, and in fact we see vicious circle of devaluation," Boyarchuk told Liga.net portal.
With the currency in free fall, and the security situation unstable, the price of Ukrainian debt also plummeted to new lows for the year.
The hryvnia started to slide immediately after the ousting of Yanukovych, and accelerated as Russia proceeded to annex Ukraine's Crimea peninsula and Russian-backed insurgents seized control of Ukraine's eastern Donbass region, provoking war. Now the hryvnia is the world's worst performing currency in 2014.
Complete story at - Ukraine's hryvnia slides to a new low of UAH16.05 to the dollar | Business New Europe
Ukraine's hryvnia slid to a new historical low of UAH16.05 to the dollar at the close of November 12 on the interbank market. This marks a 50% devaluation on the UAH8 to the dollar exchange rate propped up by former president Viktor Yanukovych from 2010 through to his ousting in February 2014 - at the expense of the nation's hard currency reserves.
On November the National Bank of Ukraine reacted by deciding to raise the discount rate from 12.5% to 14.0%, partly to prop up the forex market. According to Valeriya Gontareva, head of National Bank of Ukraine (NBU), the central bank intends to fully switch to flexible exchange rate policy and inflation targeting.
Today's crossing of the psychological UAH16 to the dollar mark will not be the end of the descent, top NBU officials warned. "A balanced hryvnia exchange rate will come into being when the currency stops devalution," Serhiy Ponamerenko, the NBU's head of currency operations told newswires on November 13.
"Unfortunately, it is impossible to judge where the slide of the hrvynia might stop," says Dmitry Boyarchuk, executive director of thinktank CASE Ukraine. "If you look at the fundamentals, then there is no need for further weakening of the hryvnia. The problem is that the country has lost confidence in the leadership of the NBU, and in fact we see vicious circle of devaluation," Boyarchuk told Liga.net portal.
With the currency in free fall, and the security situation unstable, the price of Ukrainian debt also plummeted to new lows for the year.
The hryvnia started to slide immediately after the ousting of Yanukovych, and accelerated as Russia proceeded to annex Ukraine's Crimea peninsula and Russian-backed insurgents seized control of Ukraine's eastern Donbass region, provoking war. Now the hryvnia is the world's worst performing currency in 2014.
Complete story at - Ukraine's hryvnia slides to a new low of UAH16.05 to the dollar | Business New Europe
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