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. Last Updated: 07/27/2016

Hryvna Slips Outside Government's Limits




KIEV -- Ukraine's hryvna currency slipped below the government-set trading corridor in transactions Wednesday, after a week that saw its value steadily decline.


Several deals in the interbank market, used by the National Bank to set its official exchange rate, quoted $1 at more than 4.7 hryvna, breaching the government's rock-bottom limit of 4.6 hryvna to the dollar.


The National Bank did not intervene in the market as the trading session continued and bankers predicted that the hryvna would continue to fall, Interfax reported.


Officials at the National Bank refused comment on the development. The bank set its official hryvna rate for Wednesday at 4.35 to the dollar.


Meanwhile, many street exchange points in the capital, Kiev, offered up to 4.6 hryvna to the dollar Wednesday, up from about 4.4 to the dollar Tuesday.


The hryvna began sliding in late July after remaining relatively stable for months at around 3.9 to the dollar. The fall has been attributed to a gasoline shortage that hit the former Soviet republic this summer.


Although the gasoline situation stabilized after Ukraine began receiving emergency supplies, the hryvna fall has continued. National Bank chief Viktor Yushchenko said last week that the bank did not plan any immediate measures to prop up the currency.


An analyst said the devaluation could have been triggered by commercial banks that wanted to raise extra profits at a time when the National Bank, with little money in its reserves and under pressure from the International Monetary Fund not to impose additional currency controls, could not afford to intervene.


"The [National Bank] hardly has any efficient means to influence the situation and it may just refrain from any moves and see if banks calm down on their own,'' said Hlib Vyshlinsky, an economist with the International Center for Policy Studies, an independent think tank in Kiev.


The National Bank introduced significant currency controls after devaluing the hryvna from 2.14 to the dollar in response to the financial crisis in Russia last year.


But it had lifted them in recent months to comply with the IMF's requirements for aid disbursements.


In addition, the bank, with reserves of $1.3 billion, has been buying dollars for months in an attempt to meet reserve targets required by the IMF and raise money to help the government repay about $3.5 billion in various debts by the end of 2000.