Too much hryvnia love
Ukraine’s economy appears to be hitting some rocky ground and the effects of the slide are beginning to be felt not only in banks and financial houses but also on the streets, according to KW. And nowhere more so than in capitalist powerhouse McDonald’s where the cost of a burger has been creeping up in recent months, an editorial in the last issue of Kyiv Weekly suggest.
It may only be a hryvnia here, half a hryvnia there, but it adds up to something in the region of a 10-15% price jump in a short space of time. That may only be cause for concern to fast-food junkies at the moment, but if such movement were to be translated across other economic sectors, then it won’t just be burger lovers who suffer.
The Big Mac index suggests that the hryvnia is one of the world’s most undervalued currencies according to its official (government-fixed exchange rate) which, until recently, was a steady 8 UAH to the dollar. Going by the burger standard, it ought to be more like 4 UAH to the dollar. But life, unfortunately, is not quite as simple as a Happy Meal. So why the huge difference in the hryvnia’s real-life and burger-based values, the author of the column Evan Ostryznuik is asking the reader?
Some theorists suggest that the government’s fixed exchange-rate policy has been keeping the currency artificially depressed in order to keep Ukrainian exports like steel cheap, something which disproportionately benefits the business and political elites, the editorial suggests.