Ukrainians should be aware that their national currency, the hryvnya, will hardly ever trade at 29 hryvnas per a US dollar, which now appears to be an ‘unattainable dream’, warned former Ukrainian economy minister Tymofii Mylovanov in his comments for Ukraine’s state telemarathon on Monday.
Kyiv moved to devalue the hryvna by 25 per cent last weak, calling it the currency adjustment, in an attempt to offset the pressure on the economy crippled by the ongoing war with Russia. With the rate ‘adjustment’ in place, the limping Ukrainian currency is now officially trading at 36.56 per dollar compared with 29.25 – the rate that stood frozen for the past five months.
The devaluation move drove the black market rates even higher, up to 40 hryvnay to the greenback.
‘There will be no an [exchange] rate of 29 hryvnas [to a US dollar,’ said Mylovanov, arguing the hryvna rate may see some small gains in the next two weeks – it can climb back to 36 hryvnas-per-dollar rate.
The prediction can work if Ukraine gets the grain deal going, or its government secures a new financial aid. Another, though less likely, scenario that can help make it happen can be the end of the war in Ukraine.
By contrast, if the war drags on, the hryvna will feel more heat that will put further strain on the state purse.
‘A war is very costly, there is a budget deficit and the part of it is covered by money creation, with the money printer on,’ added the former minister.