Governor of the National Bank of Ukraine met with foreign investors to explain its measures on financial market

The NBU possesses two main instruments for stabilization of the hryvnya exchange rate: FX interventions and administrative restrictions enforcement. Implementation of the unprecedented restrictive measures was necessary for fighting with panic on the market. Therefore, when the situation stabilizes and the market works under its fundamental laws, all restrictions will be lifted. It was emphasized by Ms. Gontareva during the meeting with Chamber Members.

According to Ms. Gontareva, the main factors of the hryvnya devaluation are the negative balance of payments, insufficient volume of gold and foreign currency reserves, huge capital outflow, low international rating of Ukraine and as a result - panic in the market. “The exchange rate is the mirror of what is happening in the economy, this is the derivative of the balance of payments condition. Ukraine had USD 20 bn of the negative balance of payments in 2014. USD 9 bn was received as the international aid and the USD 9 bn was paid to external creditors. All other money for regulating the balance of payments was taken from gold and foreign currency reserves”.

“Currently, the NBU is supplying the “Naftogaz” with the FX directly mostly on everyday basis. For such action USD 500 mln per month is used from the reserves. If the deficit problem of “Naftogaz”, the biggest Ukrainian importer, is solved, Ukrainian balance of payments will be not only balanced but even positive”, - said Ms. Gontareva. According to NBU Governor the effective balance of payments will serve as the main factor for stabilization of the financial market.

Following numerous questions from representatives of international companies regarding feasibility of restrictive measures on the financial market NBU Governor noted that panic is currently prevailing on the market, therefore NBU is forced to introduce certain administrative restrictions which are perceived by business negatively, but are necessary for the macroeconomic stabilization. For example, obligatory usage of the letters of credit for the volumes that exceed USD 500 000 according to Ms. Gontareva was introduced due to existing mechanism of the FX purchase through the advance contracts without the real goods shipment. The aim of the regulatory body, first of all, is to limit such actions on the market.