Serhiy Lyamets, Economichna Pravda, Wednesday, Febrary 5, 2014, 11:10 AM
The Ukrainian people have already accepted that fact that a dollar will cost 9 hryvnia. But no one expected that the hryvnia would continue losing its value.
This morning, February 5, 2014, the hryvnia opened at 9/9.4 UAH per US dollar on the interbank exchange. Tomorrow these rates will be in effect on the cash market. This morning, according to finance.ua, the prices are 8.85/8.92 for a dollar in currency exchange offices. But those rates only apply for a short while because the non-cash market drives the conditions on the cash market.
Surprisingly, we see no reaction from the authorities concerning this process, whereas the currency decline is believed to be the biggest emergency in Ukraine. Domestic prices for consumer goods have always been pegged to USD, and dollars have been used for automobile and housing appraisals.
Nevertheless, the president keeps silent. The government keeps silent. The National Bank of Ukraine (NBU, Ukraine’s central bank) keeps silent. And all of them let the devaluation process happen.
Let us remember statements of the acting prime-minister Serhiy Arbuzov and an official NBU statement that were made a few days ago in support of the hryvnia. “There are no economic grounds for the hyrvnia’s destabilization,” stated Arbuzov. And NBU analysts claim that the devaluation is temporary.
But there is reason to doubt these claims: if the devaluation is temporary and there are no economic grounds for it, then the NBU should be coping with the temporary volatility, but it is not doing so. Thus the country does not have an effective central bank, and the managers of the NBU are lacking in expertise and appropriate motivations.
Daily average USD/UAH exchange rates on non-cash market
The failure of the authorities to act means that Yanukovych is in the know and approves of the hryvnia devaluation. It also means that “the portrait” (as the president is called because he has disappeared from the public eye) will not run for a second term. Steep devaluation and its consequences cannot be fully compensated by any social programs for the Ukrainian people.
We have a hryvnia decline of 17.5% in less than in 10 days. Prices will rise by this amount. People have lost this value on their hryvnia deposits by the will of Yanukovych and Arbuzov. But let us consider: does everyone have losses from the devaluation?
On January 28 the subsequent days there were strange movements in the non-cash currency market. Some mysterious forces converted huge amounts of UAH into USD but, apparently, the money stayed here in the country. We may suggest that a certain group of people knew about coming devaluation and they turned hryvnias into dollars beforehand. Taking into account that the NBU is governed by Arbuzov’s most trusted associate Ihor Sorkin, one might conclude that the so-called “Family” of Yanukovych, his elder son Olexander, Arbuzov, their circle and the associated oligarchs, are responsible and are abusing their position of power in the country.
What is the source of dollars for these currency exchanges? The only possibility is that the dollars come from the gold and foreign exchange reserves of the NBU, as well as foreign exchange reserves of state-owned Oshchadbank, Ukreximbank, and Ukrgasbank. Time will show whether this is true or not. Soon a monthly report about the size of reserves will be announced. If the NBU reserves have fallen then the suspicions about “the Family” involvement in this become more grave. Even if the size of the reserves are reported to have “improved,” Yanukovych and Arbuzov are responsible for the impoverishment of the Ukrainian people.
“The Family,” however, has been searching for a scapegoat to blame. Irresponsible commentators have appeared in Facebook proposing to “attribute your personal loss due to Euromaidan.” They say that the people defending their civil rights in the centre of Kyiv must be blamed for the ongoing devaluation.
Dear Viktor Yanukovych! Dear Serhiy Arbuzov! What does Euromaidan have to do with it? It is you who derailed the Ukrainian economy. It is you who exhausted the gold and foreign exchange reserves of the NBU. And you do nothing to stop devaluation and the people’s impoverishment.
Another interesting development is the Russian ruble’s devaluation right now. What is the reason for such a coincidence?
Translated by Anatoliy Shara
Edited by Mariana Budgeryn