NBU mulling return to floating hryvnia exchange rate – head

The National Bank of Ukraine, in order to increase stability in the foreign exchange market, is thinking about returning the floating rate, NBU Governor Kyrylo Shevchenko said in an interview with The Asahi Shimbun.

"I want to inform you that we are now considering the possibility of easing some currency restrictions. We are also thinking about how to return to a floating exchange rate regime. Such a move will bring more stability to the foreign exchange market," he said.

Shevchenko noted that at present the deviation of the market rate from the official one fixed at the beginning of the war is "tiny."

As reported, on February 24, the National Bank suspended the work of the foreign exchange market of Ukraine, except for the sale of foreign currency, and fixed the exchange rate at the official level of that day – UAH 29.2549/$1, which led to the emergence of a "black" cash market, in which in the first days the exchange rate reached UAH 39-40/$1. Later, the regulator allowed the sale of currency in the branches that are under the threat of capture by the invaders, by decision of their leadership.

The NBU made the next liberalization step on April 15, when it granted banks and non-banking financial institutions the right to sell cash currency throughout the country at a rate not higher than "official plus 10%," but within the volume of the purchased currency. As a result, many banks declared the possibility of selling foreign currency at the maximum possible rate of UAH 32.17-32.18/$1 and at the same time raised the purchase rate closer to the selling rate.

However, according to market participants, it is extremely difficult to freely officially buy cash currency. Nevertheless, the "black" market reacted with the slight strengthening of the hryvnia, as a result of which the dollar exchange rate on it was only about 2% higher. However, as a result of two jumps at the end of April and last week, this difference increased to about 7%: on the "black" market, the hryvnia is quoted at UAH 34.3-34.5/$1.

Source: www.en.interfax.com.ua