Stelmakh, speaking to Interfax Ukraine news agency, did not say which way the bank may move the rate, but it has let the hryvnia strengthen beyond its upper limit to the dollar in recent weeks without intervening. “There clearly will be a move, both on the official and the market rate. If supply and demand on the market really shows, that we need to move, then we will have to act accordingly,” Stelmakh said.
The central bank has kept the hryvnia within a corridor of 4.95-5.25 and until recently had been intervening to keep it within an even tighter band of 5.00-5.06. The official rate of 5.05 has been maintained since August 2005.
Stelmakh talked about changing the hryvnia’s rate in conjunction with attempts to curb inflation, which reached 26% year-on-year in March. That was a further indication that the bank might be thinking of allowing the hryvnia to strengthen. “Domestic prices are important for us, because we have higher imports than exports. Setting an optimal rate will play a big role for domestic prices — for their stabilization and reduction…,” he said. He also said the current account deficit, which in Ukraine has widened due to higher gas import prices, should not automatically rule out revaluation.
The head of the bank’s council, however, said the bank was looking at widening the corridor to 4.9-5.3 to the dollar, rather than revaluing the hryvnia. “We want to be clear – both the lower and higher reaches will be widened,” Interfax Ukraine quoted Petro Poroshenko as saying. (Reuters)
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