The fall in average trading on the interbank currency market after the introduction of a fee to the Pension Fund from currency transactions in April from $1.2-1.3 billion to $200-300 million is one of the reasons for the sharp jumps of the hryvnia exchange rate, and the introduction of market-makers could overcome this phenomenon, Governor of the National Bank of Ukraine (NBU) Valeriya Gontareva has said.
“Today we have such a small and misbalanced market: if today it is $300 million, tomorrow it will be $200 million, and this difference of $100 million misbalances the market, and that is why such fluctuations are seen,” she said at a roundtable in Kyiv on Sept. 9.
Gontareva said that after the introduction of 0.5 percent fee to the Pension Fund the speculative element left the market, while it gave it its depth and a certain maneuver.
“Now the market was left with exporters and importers tête-à-tête… The average trading is from $200 million to $300 million. For the country with 45 million of population I would say this is indecent,” she added.
She took the situation that was seen a month ago as an example of the misbalance. When Gontareva was called to the Ukrainian parliament due to the hryvnia exchange rate plunge to Hr 13.60/$1, however, in practice only one deal worth $50,000 was signed at the said exchange rate.
“The technical functioning of the market is not in line with the view on flexibility that we plan to build,” she said.
She also said that the toughening of the obligatory sale of currency income from 50 percent to 100 percent by the NBU showed that Ukrainian exporters that could hide 50 percent of their income could also hide 100 percent, although the NBU will fight this using the analysis of doubtful transactions.
She said that the currency income had indeed fallen to the decline in industrial production in the Donbas.
“Agriculture is only just starting to export. We expect that there will not be any breaks and we’ll have money flows from this,” Gontareva said.
Market players who participated in the roundtable supported the cancellation of the fee to the Pension Fund from currency transactions conducted by banks and proposed to collect it only from end buyers of foreign currency. The NBU head supported the idea.
Gontareva also said that the NBU has been discussing the idea of market-makers for two weeks. The IMF mission that provides technical aid is involved in the process.
She said that 15 market-makers will hold very solid quotations with the very narrow spread.
The NBU head expressed hope that the institution will be introduced within several weeks.
