photo: Tvoe Misto/ Ivan Stanislavskyi
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Today, the dollar costs about 37 hryvnias in Lviv’s exchange offices. Earlier, the National Bank allowed banks to sell currency at any rate, although the official exchange rate remains fixed at 29.25 hryvnias per dollar. Rostyslav Slavyuk, Head of the Banking Department of the Lviv Institute of Banking, PhD in Economics, explains whether it is worth worrying about such growth and what to expect.
First of all, do not panic, runing away and buying foreign currency. Russia’s aggression against Ukraine continues, and the National Bank with the government have already won the financial war. If they did not introduce certain administrative steps and restrictions, the value of the dollar today would be at least one hundred hryvnias. Therefore, the measures were carried out correctly.
Attempts to liberalize and release the course on the basis of pre-war market mechanisms have shown that there is nothing wrong with that. The dollar did not become 50 hryvnias or more. We have entered such a phase that we should no longer be afraid of financial cataclysms.
I would like to note that the dollar exchange rate has not risen against the background of the simultaneous liberalization of fuel prices. There is always a connection between them, because traders buy fuel abroad in foreign currency. Of course, fuel will provoke fluctuations in the exchange rate, the price of fuel will never return to pre-war times. Fuel will cost the same as in the whole world, or even more. But against the background of this increase, the exchange rate is not so threatening. We need to learn to save gasoline, not dollars.
Today, we have a democratic, smooth process of changing course. Will the exchange rate continue to rise? We can say that yes. Of course, it will grow against the background of the war, but then, it will return to the level of 30 hryvnias.
If the activity of hostilities decreases, there will be more financial assistance from partners and investments, it is logical that the hryvnia exchange rate will stabilize more. There will be no threats and rapid increase, because the flow of currency and investment will be significant.
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Of course, if aggressive hostilities continue and Russian troops destroy infrastructure, it will negatively affect the economy and, consequently, the exchange rate.
The macroeconomic situation always affects the formation of the exchange rate – if there is GDP growth, production and construction. But it is clear that if in certain areas production has fallen by 50% or more, the national currency can not remain as it used to be. If GDP is reduced by 30%, then in any country in the world, the currency falls by at least 30%. We have reduced production, construction, transportation by 30-50%, but the hryvnia has not fallen so much – according to those indicators.
Due to the loss of GDP, industry, logistics, and trade, the exchange rate should be 100 hryvnias per dollar. But we survived. The currency is released for free circulation, and we do not see any failures. Otherwise, after the decision of the National Bank after May 21 [when the restrictions on the exchange rate of cash in banks – ed.], we would have 70 hryvnias per dollar. That is, we restrained 50% increase in the rate. In contrast to what Hontareva (former Minister of Economy of Ukraine, appointed by ex-president Petro Poroshenko) did when the first stage of the war took place, the financial system was abandoned, although there was no such decline in industry and losses in the economy as there is today.
Therefore, the hryvnia has survived. We have won financially, which is actually 50% of the victory in the war.
By Rostyslav Slavyuk, translated by Vitalii Holich
Photo: Your city / Ivan Stanislavsky
The author’s column is a reflection of the author’s subjective position. The editorial board of «Your City» does not always share the views expressed in the columns, and is ready to give dissenters the opportunity for a reasoned answer.
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