Finance Ministry, NBU should enhance coordination
Finance Ministry of Ukraine and National Bank of Ukraine (NBU) should enhance coordination across an entire spectrum of their interaction, said NBU Board Chairman Bohdan Danylyshyn.
"In this particular case, the Ministry of Finance should optimize the borrowing schedule so as not to make prerequisites for fluctuations on demand of hryvnia [Ukrainian national currency] in the foreign exchange market. The NBU, in my opinion, also needs to optimize the existing intervention strategy, taking into account the goals established by the law on the National Bank of Ukraine," he wrote a on Facebook on Monday following the discussions over expedience of the recent strengthening of the national currency.
Danylyshyn said that despite its numerous recommendations to improve coordination efforts between the NBU and the government, the level of their interaction of all times was standing on the bottom.
The NBU has its publicly declared policies and procedures, adheres to the inflation targeting regime and the flexible exchange rate regime, as well as the previously approved foreign exchange intervention strategy, while the Ministry of Finance in its work is guided by the Budget Code and its own schedule of borrowings, the chairman wrote in his post.
"A significant concentration of borrowings in July and early August favored the purchase of UAH 14 billion in national government bonds by non-residents, this surge in demand in the foreign exchange market caused weakening of dollar," he said.
As reported, in late July recently-appointed PrivatBank's supervisory board member Roman Sulzhyk opened the discussion on expedience of the recent strengthening of the national currency.
He said that the strengthening of hryvnia should have been stopped by the NBU on the level of UAH 26-27 per dollar.
Finance Minister Oksana Markarova backed his position saying that the ministry however has no influence on the NBU.
For his part, NBU director of the open markets department Serhiy Ponomarenko has told Interfax-Ukraine that the central bank will soften sharp rate movements, however it will put interfere in the market trend of national currency consolidation.
"A hryvnia rate is floating one in Ukraine, not a fixed one. We have no such strategy to defend any figure, for example, to prevent the hryvnia from consolidation on the level of 25 hryvnias per 1 dollar or not to make depreciate to less than 30 hryvnias per one dollar. This is what floating currency policy is. It changes depending on demand and supply," he said, responding to questions about whether significant consolidation of the Ukrainian hryvnia is reasonable.