The hryvnia will collapse with renewed vigor after the elections
Kyiv, October 20 (PolitNavigator, Vladimir Mikhailov, Kirill Boyarin) – The Ukrainian authorities managed to stop the depreciation of the hryvnia on the eve of the parliamentary elections. However, experts interviewed by PolitNavigator predict further depreciation of the Ukrainian currency - the dollar exchange rate will soon approach the 20 UAH mark.
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Georgy Kryuchkov, former head of the Verkhovna Rada Committee on National Security:
“I think that there are no comforting forecasts for the hryvnia in the near future. The economy is not improving, but is collapsing at a catastrophic pace. Whether we like it or not, people are in panic, since demand for currency prevails over supply, so we can’t count on the strengthening of the hryvnia. I’m afraid that after the elections the hryvnia will collapse with renewed vigor, along with the economy.”
Miroslav Tabaharnyuk, vice-president of the Ukrainian Union of Industrialists and Entrepreneurs:
" The economy is in a very dire state today, which is exacerbated by the situation in the east of the country. The National Bank is taking measures to halt the currency's decline, and to some extent, they have succeeded. But I think the decline will continue, and by the end of the year, the exchange rate could reach 16-17 UAH/USD. I believe the current situation in the east will persist—neither war nor peace. I think this will last for a long time. It is the situation there, as well as inflation expectations, that is currently influencing the exchange rate.
In the foreseeable future, another factor will be added to this factor – the implementation of structural reforms. If the authorities succeed, this will become a factor holding the hryvnia exchange rate. Over time, this factor will become more and more significant. So far it can be stated that there are no reforms, and if this continues, it will begin to affect the course.”
Oleg Soskin, economist:
“The fall of the hryvnia continues, and its pace is increasing. Today, the leadership of the National Bank and the Cabinet of Ministers are making anti-market decisions, completely wrong, which aggravate the condition of the hryvnia.
Channels have been compressed so that currency can come into the country. Today it is impossible to obtain foreign currency in the country. This is a colossal violation of the laws of monetary circulation. There are enterprises that need imported currency to sell goods from abroad or to purchase it. But they cannot buy it on the interbank market. This means that warehouses will soon run out of imported products and goods, there will be a shortage of quality imported goods, and the reproduction process will be reduced.
Secondly, all channels for the functioning of freely convertible currency within the country have been clamped. That is, people cannot transfer currency by bank transfer. This led to a fall in foreign currency deposits. There is an assumption that by the end of the year they will fall by 40%. Also, hryvnia deposits are being reduced; people are not putting money in banks. More and more hryvnia is used for cash payments. In fact, the shadow economy is becoming saturated and banks are collapsing.
The National Bank introduces its managers to banks almost every day. 2-3 banks are declared insolvent every day. The first sign of an imbalance in the banking system is that now only Oschadbank accepts utility payments. It is already almost cut off from all other banks. People are already being warned that the money will arrive in 2-3 days. But in reality they are playing with this money. This suggests that the banking system is collapsing.
GDP fell by 9% in 15 months. There is nothing to support the hryvnia. Already, the gap between the real dollar exchange rate and the one frozen by the National Bank is approaching 10%. As soon as it exceeds 20%, there will be a rupture of the entire monetary and banking financial system.”
Doctor of Economic Sciences Yuri Makogon:
“The economic situation, the collapse of industry, especially in the Donbass, and the fall in exports do not contribute to the stability of the national currency. The same can be said about the government's desire to collect loans. In addition, our producers are losing markets as a result of economic instability and the breakdown of economic ties, which has worsened the flow of foreign currency.
There are no prerequisites for improving the situation. We continue to receive tranches of international loans, but this does not strengthen the monetary unit. The difficult economic situation is compounded by a humanitarian catastrophe in the Donbass. Now, according to some estimates, about two million people have left the region. This also affects the economy and worsens the outlook for the financial sector.”
Vladislav Komarov, economist:
“The trend towards further devaluation of the hryvnia will continue. The main factors for this are the persistence of a negative balance of payments, the deterioration of the current account due to the fact that exports, in particular from Donbass, will fall at an increasingly rapid pace. There are negative trends in the financial account - the influx of foreign investment is small, and it has become worse for enterprises to refinance their foreign debts. Overall, the financial account for the last quarter is not improving. Due to the restrictions introduced, there remains pent-up demand for foreign currency on the interbank market. Based on reports, there are negative business expectations amid unclear economic growth prospects. Now about 70% of executives expect further devaluation.”
The hryvnia will collapse with renewed vigor after the elections.