At the current stage, the advantages of fixing the Hryvnia exchange rate are greater than the disadvantages, according to the National Bank.
The main factor in keeping inflation under control is the adjustment of the hryvnia exchange rate. But this was achieved through a series of measures, including increasing the discount rate to 25%. This was said by the director of the department of monetary policy and economic analysis of the NBU Volodymyr Lepushinsky in an interview for Interfax-Ukraine, published on Monday, January 16.
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“The controlled inflation, which at the end of the year was lower than the forecast of 30%, was achieved thanks to a set of measures. It is not only the discount rate. It is, first, the adjustment of the value of exchange. If the NBU had not fixed the rate, inflation would have been higher,” – he said.
According to him, in order to maintain the exchange rate adjustment, it is necessary to maintain international reserves and make the Hryvnia attractive.
“Depositors should have confidence that the deposit rate will partially protect their funds from inflation. So in the context of the stability of the foreign exchange market and the fixed exchange rate, the discount rate of 25% helped. Of course, the discussion that the something can be done otherwise, it is always relevant, but for now the result is on the scoreboard,” stressed Lepushinsky.
He added that the second effective tool in keeping inflation under control is limiting the amount of deficit monetization, because the National Bank has established a direct link between monetization and pressure on the foreign exchange market.
The director of the department noted that at the current stage, the advantages of fixing the exchange rate still outweigh the disadvantages.
“First, the fixed rate is an anchor for stabilizing expectations. Now it is difficult to find an alternative to it, because, despite the fact that inflation is controlled, it is still high, and we have not moved to its trajectory. denial,” Lepushinsky explained.
He added that, secondly, the money market now has very little power to find balance, because the demand for money is significant, which is due, among other things, to a significant deficit in the state budget , “which must be in these conditions.”
“At the moment we do not see any significant imbalances specifically related to the exchange rate adjustment,” said Lepushinsky.
According to him, the moment of the return to the floating rate is connected not so much to any calendar dates, but to the requirements.
“This will happen when the foreign exchange market has more opportunities for self-balancing and finding balance, when there is an alternative anchor to stabilize expectations. Before the full-scale invasion, this role was played by inflation, ” said the director of the department.
According to him, it is very difficult to predict the moment when there will be a transition from fixed to floating exchange rate. “Moreover, most likely, it will happen gradually,” – said the representative of the National Bank.
Recall that by the end of 2022, inflation in Ukraine reached 26.6%, although at least 30% was predicted. At the same time, consumer prices rose 0.7% in December compared to November.
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Source: korrespondent
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