The main reason for the reduction of the national currency against the dollar is the financing of the state budget deficit through the issuance of the hryvnia by the NBU.
The depreciation of the hryvnia against the dollar was due to funding the state budget deficit through the issuance of the hryvnia by the National Bank. This was stated by Deputy Head of the NBU Serhiy Nikolaychuk during the presentation of the Financial Stability Report.
“In recent weeks, months, we see increasing devaluation pressure. We see an increase in the volume of NBU interventions to support a fixed exchange rate,” he said.
According to him, “first of all, this is due to the growth of emission financing of the state budget, which the NBU had to go to the beginning of the war because of the deficit formed.”
Nikolaychuk recalled that the NBU believes that emission financing should take place according to the “residual principle”, and the government and the Ministry of Finance should use all available mechanisms to finance the budget deficit through officials. external and internal borrowings.
As you know, after the start of the war, the official exchange rate against the dollar was fixed at 29.25 hryvnia.
And from May 21, the NBU allowed banks not to limit their rates for the sale of cash currency, and also removed restrictions on the rate at which banks write off hryvnia funds from cards for non-cash payments or withdraw funds from overseas cards.
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Source: korrespondent
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