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Why is the dollar growing in Ukraine today?

At present, the US dollar rate on the Ukrainian Interbank Currency Exchange came to a delicate balance and stabilized in the range of 20-21 UAH. This position can not be considered a long-term forecast, even though the price of the world currency has fallen significantly compared to the previously observed values, reaching 30 or more UAH / USD. Pessimistic forecasts of analysts are being built immediately for several reasons. At moments of peak demand, no one asked particularly why the dollar is growing in Ukraine. This seemed quite natural result of the general instability in the country against the backdrop of the separation of the Crimea, the escalation of the military confrontation in the East and the panic expectations associated with these circumstances. Today, in a few months, there is an opportunity to analyze the causes of the hryvnia's fall and assess its prospects.

Instrument - currency interventions

In order to understand what is associated with the growth of the dollar in Ukraine, it is necessary to understand the general causes of this phenomenon without being tied to a particular country. Economic laws work roughly the same in all parts of the world. Exchange rates fluctuate in Africa, and in Asia, and in America, and even in distant Australia, their trends are carefully analyzed by stockbrokers, making estimates and forecasting further growth or fall in ghostly digrams. Of course, each specific market has its own specific factors, but, in general, the price of a monetary unit depends on several determining factors. The most powerful regulator is the intervention of the Central Bank of the country. This means that in case of undesirable drop (Indian rupee, for example), the central bank of India starts selling the dollar, thereby knocking down the price for it. Where he takes foreign currency is a secondary matter. The Central Bank can extract it from gold reserves or borrow from another state.

Debts

There is one more important question, answering which, one can understand why the dollar is growing in Ukraine. Today, the internal debt of the state has exceeded the value of one and a half trillion hryvnia. This amount is quite commensurate with the size of the gross national product, that is, the value of all the material values produced in the country for the year. The sum is catastrophic, but not comprehensive. There is also an external debt, the dimensions of which are measured in billions of dollars, and in double digits. The government is negotiating for restructuring, understanding it, obviously, as a deferral of payments with the prospect of complete forgiveness, but, despite the bright promises, things are still tight. Meanwhile, the dollar's rate is growing slowly, but surely. "Ukraine, why did you endure the criminal regime of Yanukovych for so long?" - ask patriotic citizens. Then follows a historical digression.

As it was before

It can not be said that during the reign of President Viktor Yanukovych, the economy was very good. According to Gontareva, newly appointed by the Minister of Finance, three years was enough for a "criminal regime swept away by the Revolution of Virtue" in order to spend 23 billion people's dollars on an empty business of maintaining the exchange rate within 8.10 UAH / $.

This is true. Moreover, Gontareva's data is still flattering to Azarov's government: they still need to add the amount of external debt growth ($ 2.4 billion). But everything is known in comparison. About how large the growth rates of currency interventions are now, one can judge from the dynamics of the decline in the gold and foreign exchange reserves.

Reserve

The gold and currency reserves of Ukraine, as of early 2015, amounted to $ 7.5 billion. There has never been less in the history of an independent state, except in February 2004. ZVR is needed by any country to ensure its own economic independence. A special need arises in especially difficult periods, one of which is observed just now. However, in difficult times reserves are usually very carefully spent. Reducing them by 8 billion against the background of the growth of debts by $ 2.6 billion did not answer the question about why the dollar is growing in Ukraine, and quickly and by hundreds of percent. After all, huge amounts of money have been spent on stabilizing the exchange rate, and the result turned out to be negative.

Naftogaz hole and hryvnia issue

The entanglement of the blue fuel acquisition scheme can discourage an ignorant person. In fact, the exchange of shares of this intermediary firm for government bonds (OVDP), seemingly invented in order not to spend precious foreign currency, is, in the final analysis, reduced to buying them for all the same dollars. Where do they come from? Yes, all of the same rapidly melting gold and currency reserve. It is necessary to pay for gas, but for some reason the suppliers (both Russian and European) do not want to take the bonds. Since Naftogaz spends more than it earns, the growing financial hole has to be closed with the same securities, and for their repayment hryvnias are used, the seal of which goes ahead of schedule. Shock work Gosznak, which resulted in uncontrolled emission - one of the reasons why the dollar is growing in Ukraine today, albeit secretly. The limit to this phenomenon is established only by the size of the gold reserves, which all decreases.

War

Whether there is a war in the east of Ukraine today is a complex and controversial issue. Judging by the number of human casualties and destruction, it certainly takes place. Moreover, it is her current government who calls the main cause of economic distress. The northern neighbor (the so-called Russia) shows aggressive attempts - that's why the dollar is growing in Ukraine and other unpleasant things are happening. Indeed, a protracted military operation, bashfully called anti-terrorist and accompanied by a stupid partial mobilization, costs the budget unacceptably high. However, it is not the main reason for the devaluation. The disruption of economic cooperation with the CIS countries and, in the first place, with the Russian Federation, has a greater impact on this process. The consequence was a sharp decrease in the tax base. Industrial enterprises lost supply channels, unemployment and deficit of the state budget increased (the planned level is 3.7% of GDP, or 63.7 billion UAH in absolute terms, but it is unlikely to be kept within these borders).

The banking crisis

The solvent population is the basis for the prosperity of the national economy. Almost instant devaluation has put millions of customers of Ukrainian banks in a critical situation. Taking foreign currency loans at a rate of 5 to 8 hryvnia per dollar, they faced a difficult choice between the loss of partially paid property and the need to pull the unbearable strap of three-fold increased mandatory payments. The losses of banks were also considerable, the collateral value of the acquired objects decreased, as did their liquidity. For customers, the issue of why the dollar is growing in Ukraine became important, they are often physically unable to fulfill the terms of the contract, which negatively affects the entire banking system, introducing it into stagnation.

Prospects

All the hopes for the forthcoming stabilization of the economic situation in Ukraine the country's leadership assigns to effective reforms and foreign (western) credits, at least, such exit routes are declared from high tribunes. About why the dollar is growing in Ukraine, during the heartfelt speeches, neither the President nor the Prime Minister tells how to expect the hryvnia in the near future. One of the most important tools to contain the fall of the national currency was the artificial restriction of the sale of currency to importers. This reduces the instant demand for the dollar, but in this case it simply becomes deferred. As far as reforms are concerned, most of the population does not understand their purpose. Most often, as an achievement, the forthcoming possible agreement on visa-free border crossing with the European Union is mentioned. To the currency regulation this issue, however, has no relation. Without large-scale external assistance, the economy will not be able to overcome the systemic crisis, and no country is in a hurry to provide it. In these conditions, the question of why the dollar is growing in Ukraine may soon completely lose its relevance.

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