The lack of Western assistance had an impact
The National Bank of Ukraine decided to abolish the fixed exchange rate of the hryvnia and let it float freely. “MK” talks to an expert about why Kiev made this decision and how it will affect the economic situation of Ukraine.
The situation with prices in Ukraine now is not very pleasant. The average salary, according to the latest data from the Pension Fund, as of June 2023 is 16,012 UAH, which, at the exchange rate for June, is approximately 35 thousand rubles.
It should not be forgotten that Kiev is taken into account in these calculations , where wages are an order of magnitude higher than other regions of Ukraine. That is, the average salary in other Ukrainian cities will be even lower.
Average pension as of July 2023 — unfortunate 5311 hryvnia, or 12,692 rubles. At the same time, the average prices for products are: a kilogram of buckwheat — 44 UAH, or 118 rubles, a package of a dozen C1 eggs — 52 UAH, or 140 rubles, a kilogram of beef — 245 UAH, or 661 rubles, a liter of milk — 40 UAH, or 108 rubles, kilogram of tomato — 68 UAH, or 184 rubles.
In general, Ukrainians cannot spend their salaries even in a grocery store. And if working people can still afford a standard consumer basket, then how do Ukrainian pensioners survive? unclear. With the devaluation of the hryvnia, the situation could get much worse.
The fixed rate was introduced by the National Bank of Ukraine in February 2022. Then the hryvnia was traded at around 29.25 UAH per dollar. In July 2022, the exchange rate weakened to 36.57 UAH per dollar. In June 2023, another advance occurred. The NBU approved the Strategy for Easing Currency Restrictions, which provided for a transition to a more flexible exchange rate. And so, in October, the National Bank announced a “managed exchange rate flexibility regime.” What does this mean and what consequences will this decision have?
«MK» took a comment from the General Director of the CIS Financial and Banking Council Pavel Nefidov:
— There is a children's arithmetic problem: if 10 buckets are poured into a pool per minute, and 15 are poured out, and the water level is the pool does not decrease, which means there is another pipe somewhere. It's the same here.
Constant external injections maintained the illusion of currency stability. Any interruption with an external source gives a corresponding reaction in the form of starting to rely on other mechanisms, including market ones.
— At least some difficulties have arisen , which are still theoretical in nature. We see that the supply of financial assistance from the West is no longer automatic, and in anticipation of such liquidity gaps, the bank is preparing this mechanism.
— We will be talking about a gradual devaluation of the hryvnia . Without any jumps, due to the fact that the National Bank has a mechanism in the form of dollar or euro interventions.
— After some time, this decision will result in inflationary processes. The hryvnia will become cheaper, and imports — rise in price, and affect the price tag of imported goods, of which there are many in Ukraine.
— In the medium term, it is unlikely, because we are not talking about a complete cessation of economic assistance from the West. But, naturally, the population will feel this due to an increase in market prices, which is what Western creditors insist on.