Deputy Director of Department of monetary policy and economic analysis Vladimir Lepeshinsky explained why the national Bank of Ukraine has no plans to stem the revaluation of the hryvnia. Reasons, the official said in his newspaper column.
In July 2019 the exchange rate of hryvnia to the dollar has overcome the next psychological boundary: 25 UAH. and the US dollar. It broke the seasonal trend of devaluation of the hryvnia. And those who traditionally expect depreciation of hryvnia since the second half of summer, wrong.
Some experts, according to Lepeshinsky, urged the Bank to increase volumes of purchase of currency and to stop the revaluation. In their opinion, the rapid strengthening of the national currency hurts the economy, and the actions of the NBU incomprehensible.
Lepeshinsky explains that the actions of the NBU are subject to long-term monetary policy strategies and foreign exchange interventions. According to these strategies, the Bank adheres to the floating exchange rate regime hryvnia, and monetary policy does not aim to reach a certain level or range of the exchange rate.
Market rate is determined by demand and supply in the foreign exchange market is the main fuse for the accumulation of economic imbalances. This contributes to the early achievement of price and financial stability, sustainable economic growth.
The artificial retention of the exchange rate from the revaluation due to full redemption of NBU currency, according to Lepeshinskogo, contrary to the intention of the Bank to reduce inflation to 5%. To achieve this goal the national Bank is pursuing a policy of expensive hryvnia. Derive from it higher interest rates and strong exchange rate.
But the cheaper hryvnia will push up prices, accelerating consumer price inflation.
In General, as summed up Lepeshinsky, the Bank successfully performs its role in the foreign exchange market smooths out excessive exchange rate fluctuations that are harmful to the economy, and accumulates international reserves — a safety cushion in case of macroeconomic deterioration.