Ukraine Abolishing Fixed Dollar Exchange Rate – Details from the NBU
Date: 2023-09-15 Author: Dima Zakharov Categories: ECONOMY
Transitioning to a Flexible Exchange Rate
The NBU has expressed its intention to shift from the current fixed exchange rate of 36.56 Ukrainian hryvnias (UAH) per US dollar to a more flexible system. However, this transition will not happen overnight and will involve a series of processes outlined in the coordinated program with the IMF for currency liberalization.
Reduced Interest Rates
During the recent committee meeting, the NBU also reduced the base interest rate from 22% to 20%. This move is seen as part of the broader effort to stabilize the country's economic situation and facilitate the transition to a flexible exchange rate.
Conditions for Abandoning the Fixed Rate
The NBU has established specific criteria that need to be met before fully transitioning away from the fixed exchange rate. These criteria include:
The rate of inflation in the country
Inflation: The rate of inflation in the country.
Real Market Interest Rate: The actual market interest rates.
Gold and Foreign Exchange Reserves: The state and volume of foreign reserves.
Currency Market Situation: The overall state of the currency market.
Financial Stability: The country's financial stability.
Preservation of Risks: Ensuring risks are minimized during the transition.
Andriy Pyshty, the head of the NBU, emphasized the complexity of the task, likening it to a sniper trying to hit a moving target. The NBU aims to achieve the transition without causing harm to the current economic achievements.
