The hryvnia exchange rate by late 2012 will fall to UAH 8.25-8.45/$1 and by the end of 2013 it will weaken to over UAH 9/$1, the director of the Da Vinci analytical group, Anatoliy Baronin, has said.

"The key factor defining the devaluation pressure on the hryvnia exchange rate was the influence of the crisis in eurozone in November and December 2012. On one hand, this is a fall in demand for Ukrainian products, and on the other hand this is the collapse of the investment market… Our forecast for late 2012 is UAH 8.25-8.45/$1 and for late 2013 – over 9/$1," he told Interfax-Ukraine.

He said that payments on foreign liabilities worsen the situation, as well as serious devaluation and inflation expectations of the public and business, which traditionally insure against risk by purchasing foreign currency.

"It is unlikely that in 2013 the situation will change radically. The crisis in the eurozone will continue, and demand will remain at a smaller level than before the crisis. The attempts of Russia to fix Ukraine in its economic space via restricting its export flows on its territory and increasing prices of energy will also undermine the competitiveness of Ukrainian exported products," the analyst said.

According to the consensus forecast prepared by the authority in November on the basis of expert estimates from 15 state and non-governmental organizations, the hryvnia exchange rate to the dollar as of late 2012 will be UAH 8.41/$1, and at the end of 2013 it will be UAH 8.81/$1.

Baronin also said that recent initiatives of the National Bank of Ukraine (NBU) represent a change in the previous practices of the regulator.

"The situation shows that there are contradictions inside the financial block: those who support the necessity of a smooth devaluation and those who want to support the exchange rate at any price," the director of Da Vinci said.

He said that the initiative of introducing the 15% duty on the sale of currency is an unjustifiably tough measure, which stirs up the shadow market and panic on the market, and again it will sap trust in authorities and the national currency.

"We support the option of a smooth and regulated devaluation to avoid the scenario of a [rapid] devaluation. In unfavorable economic conditions, the long-term retaining of the national currency exchange rate is impossible. There are no successful examples of such efforts, and this should be taken into account," Baronin said.

He said that the regulator has not exhausted more liberal instruments for influencing the market.

The group said that authorities should fully liquidate the forex market in Ukraine to prevent exchange rate fluctuations, as it is a speculation on the exchange rate. Institutions with a banking license should have the right to play on the forex market.

The group believes that it is better to form a single base of persons who buy foreign currency.

"This will allow the conditions to form for fighting schemes of purchases of foreign currency for the shadow market, and control transactions carried out by persons in the interests of shadow structures," Baronin said.

He said that the ability to exchange foreign currency into hryvnias should remain free.

The group also recommends that the authorities liquidate currency exchange outlets, allowing only banks to carry out such transactions in bank premises.