The current situation on the cash currency market can be characterized, if not as a slide into the Stone Age, then at least as a state of "sustained chaos." The stability achieved in recent years on the foreign currency exchange market was destroyed in a matter of weeks. Surprisingly quickly, the black market revived, near currency exchange offices the already almost forgotten money changers flickered again, and in the "exchange offices" themselves, from the very morning, they declare that dollars existed but ran out, or that the sale limit for today has already been exhausted. Why the dollars disappeared, cashiers, as a rule, do not comment on. However, a feeling emerges that the hype is somewhat artificial. In our view, it was created not so much by the population's demand for dollars as by the not entirely prompt administrative actions of the National Bank.

"You'll take the interest in hryvnias at the NBU rate"

At first glance, no hype for dollars is observed in Kyiv. Exchange offices and bank branches are open, there are no queues near them. The announced exchange rate is unusually stable: buying — 5.35—5.39, selling — 5.412. However, an attempt to buy 100 US dollars over the course of a week was never crowned with success. In some offices, true, they offered to buy a smaller sum, but it looked more like an exception to the general rule. A feeling arose that the dollars had nonetheless disappeared somewhere. More glaring cases also became known. An acquaintance, upon closing a currency deposit in a small bank, was informed of the absence of cash dollars and offered to take the interest on the deposit "in hryvnias at the NBU rate"! Is it worth saying that today, when the dollar on the black market costs 5.7—5.8 hryvnias, and the NBU rate is 5.3 hryvnias per dollar, such an offer sounds like mockery, since it completely nullifies all income from the currency deposit. Such cases can no longer fail to alarm. If banks are beginning to experience difficulties in purchasing currency for scheduled payments, then this is already serious.

Titanic efforts of the National Bank

Let us recall that the September dollar hype was managed to be calmed by the NBU with decisions unprecedented in their radicalism. First, the restrictions preventing banks from selling the population more currency than had been bought were lifted. Second, the National Bank decided to conduct interventions of cash currency at a fixed rate of 5.3150 per dollar, promising, if necessary, to sell up to 1 billion dollars. Selling American currency, the NBU simultaneously limited the deviation of the rate in exchange offices to two percent from the official one.

At the trades that took place on October 15 and 20, the limit for all banks was 20%, or approximately 100 million dollars. In reality, 75 million were sold on the first day of trading and about 80 million — on October 20. In the non-cash segment of the market, from October 18, the National Bank sold Ukrainian banks 266 million dollars. Last week, the NBU increased the volume of possible interventions at the trades for cash US dollars, previously announced for October 25, to 150 million dollars. The maximum amount of sale of cash foreign currency during the trading session was increased to 30% of the established credit limit for the respective bank. This amount constitutes approximately 150 million dollars for the entire banking system.

Currency "for oneself"

On the one hand, the very decision of the National Bank allowed the dollar exchange rate to be stabilized, however the implementation of this decision turned out to be not so successful. The lack of experience in selling such large volumes of cash currency and of an effective system of control over the subsequent sale of currency led to the fact that the dollars never reached the population.

According to the bankers' own admission, many commercial banks do not sell dollars through exchange offices, but realize them through the black market or to "the right" people. The reason is extremely transparent. Bankers know how to count money and do not wish to quell the hype for dollars, losing potential profit.

The non-cash dollar, in view of the collection to the Pension Fund (1.5% when buying on the interbank market), costs banks 5.385 hryvnias. Selling it at the rate of 5.412 (2% from the official) is extremely unprofitable, especially when taking into account the overhead costs of its transportation and sale. The NBU's cash sales remove the problem of the pension levy, however even these dollars only very patriotically minded bankers agree to sell to the population. The NBU is practically unable to control how the purchased currency was realized. As a result, the dollars either go "to the left" or settle in the banks' cash desks.

Indeed, if during 2003 and the first half of 2004 the average daily balances of cash foreign currency in the banks' cash desks amounted to 170—180 million dollars, then in October this indicator increased to 300—400 million dollars, noted acting NBU head Arseniy Yatsenyuk.

The National Bank believes that in this way Ukrainian banks are maintaining an artificial deficit of cash foreign currency, and this intensifies the hype. "Strict measures will be taken against banks that increase the balance of cash foreign currency in their cash desks in a situation of foreign currency deficit on the cash currency market, including termination of participation in the trading session for the sale of cash foreign currency," stated the acting head of the National Bank.

However, the problem would not exist if the population's demand for American currency had remained at least at the September level. The approach of the elections and the fanning of political passions with the simultaneous strengthening of inflation nevertheless played a decisive role. Ukrainians are actively buying up currency and opening dollar deposits in banks. Every week, deposits in American money increase by about 40 million. Currently, there is almost 3.5 billion dollars in deposit accounts. Every fourth dollar Ukrainians brought to banks this year. Since the beginning of the year, the deposits of Ukrainian citizens in hard currency have grown by 826.3 million dollars.

One wants to believe that after the elections the dollar hype will subside on its own. However, what is alarming is that none of the bankers surveyed undertook to predict with sufficient probability the dollar exchange rate in a month. The spread of opinions is surprisingly wide: from 5 to 6 hryvnias per dollar...

Artur FEDORCHUK