KYIV, November 20. The national Bank of Ukraine (NBU) after a week’s growth of the dollar tanked and has lowered the price of the American currency on 8 copecks, the Euro by 3 kopecks. Today, the NBU has established the following exchange rates among the major foreign currencies against the hryvnia: 1 dollar – 23,83 hryvnias, 1 Euro formed 25.47 hryvnia for 10 Russian rubles – 3,67 hryvnia.
The hryvnia will save the IMF loan
Throughout the week the American currency has added in the interbank currency market at 30-50 cents on a daily basis, breaking a seven-month record, and Recalling the first phase of the infamous February crisis. According to experts, one of the main causes of the current fever on the foreign exchange market – relations between Ukraine and the IMF. The next tranche of the promised “stuck” in September. Now in Ukraine there is an IMF mission to find out how the Ukrainian government plans to fulfill its obligations in 2016. In particular this applies to the budget for the next year. The Fund needs to reduce the expenditures of the state Treasury. On Saturday, the mission will leave Kiev, and not waiting for a response from the authorities. The draft budget for 2016 is still in the Finance Ministry, which leads backstage war with the Verkhovna Rada concerning tax reform. Prime Minister Arseniy Yatsenyuk said that the budget should not be taken on the basis of the current Tax code. Profile Committee of the Council agrees with the head of government, but offers its own version of tax reform.
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The Minister of Finance Natalie Jaresko argues that the proposal of the head of the parliamentary Committee Nina Juaninos, the number of MPs and experts to reduce tax rates under the tax reform threaten the stability of the state, as it will lead to a rise in the budget deficit. “Alternatives that offer only to reduce taxes, increase budget deficit and public debt, threatening the stability, economic recovery,” – said Yaresko. Meanwhile drafted by the Parliament, provides for the reduction of budget revenues by 200 billion UAH (more than $8 billion).
Who will win is hard to say. Yiannou support of deputies, behind Jaresko: IMF. At this point, neither one of the parties failed to achieve a decisive advantage. This means that in the coming weeks is not clear neither on budget nor on tranche from the IMF.
The hryvnia exchange rate affects the debt of Ukraine to Russia
Another reason for the “rush” of the hryvnia experts call the outstanding issue of debt of $3 billion to Russia.
© Mikhail Metzel/TASS
Putin: the IMF could add $3 billion to Ukraine to repay debt to the Russian Federation
On Monday, President Vladimir Putin said that Russia is ready to restructure Ukraine’s debt, allowing it to repay $1 billion in 2016-2018, subject to safeguards it from the authorities of the United States or the EU, or one of the international financial institutions. While Kiev did not answer, citing the lack of a formal proposal. “Nothing,” Yaresko told journalists.
Experts believe that Ukraine is unlikely to agree to the proposal of the Russian Federation. Exclusive debt restructuring terms to Russia may cause a riot among commercial creditors recently agreed to write off 20% of the debt of Ukraine.
The reduction of currency revenues from exports
One of the reasons for the skewness of the market has also been decreasing currency inflows from exports, experts say. Half of Ukrainian exports are ferrous metals and agriculture products, and the price of both first and second in the world markets continue to fall. At the same time, there is a seasonal increase of gas imports. Naturally, the growth of demand for currency with a reduction of supply leads to dollar buying by importers and the weakening of the hryvnia.
© Denis Vyshinsky/TASS
Russia still expects Ukraine to repay the debt, the decision on restructuring no
“However, in the medium term there are no large-scale drivers of the weakening of the hryvnia. This is due to the stability of the balance of payments, the contraction of the money supply and the limited liquidity of the system”, – says a leading expert of information-analytical center FOREX CLUB in Ukraine Andrey Shevchishin. In his opinion, the course to the cash market may vary in the range 23 to 25 hryvnias for $ 1. “For a significant weakening of the hryvnia fundamental reason in the country there,” – said the expert. Shevchishin believes that only a combination of several negative factors, for example, the collapse of the parliamentary coalition and the incapacity of the Parliament, the resumption of active hostilities in the Donbas, the lack of cooperation from creditors may weaken hryvnia.
In his opinion, affect the FX market and NBU restrictions. As reported, the NBU on 3 September again extended the restrictive measures introduced in 2014-2015. Restrictions will be in effect at least until 4 December 2015. In particular, the requirements remain mandatory sale of 75% of foreign exchange earnings and return to Ukraine in the 90-day period, the daily limit on the sale in the hands of some foreign currency in 3 thousand hryvnias, the daily limit on cash withdrawal in national currency through cash desks and ATMs in 300 thousand hryvnias. The NBU allows the removal of administrative restrictions on the foreign exchange market by mid-2016, provided a favorable situation in the financial sector.