Central bank head Stelmakh wants Hryvnia-Dollar `review`
``It is in discord with reality``, he said
Ukraine central bank Governor Volodymyr Stelmakh reiterated that the bank may change the official exchange rate of the hryvnia against the dollar, which it has kept stable for three years, according to Bloomberg.
``The official rate needs to be reviewed,`` Stelmakh today in Kyiv in an interview at the European Bank for Reconstruction and Development annual meeting. ``It is in discord with reality`` in the interbank market.
The hryvnia has gained 5.1 percent this year in the interbank market amid speculation the Natsionalnyi Bank Ukrayyny has abandoned its practice of buying and selling the currency to keep it steady against the dollar. It climbed to 4.74 yesterday, the highest level since 1999, while its official rate is 5.05 to the dollar.
The Kyiv-based central bank controls the hryvnia rate by selling and buying dollars, unlike other European central banks that use interest rates to control inflation. It strengthened the hryvnia to 5.05 against the dollar in April 2005 from as low as 5.6 in November 2004. The bank has kept the official rate at that level since then.
Stelmakh declined to comment on what a new official rate might be, or when a review would be completed.
``If we let the hryvnia trade freely, we won`t operate in the market,`` Stelmakh said.
The hryvnia`s appreciation will help to curb inflation, said Stelmakh on Nov. 2. Ukrainian inflation rate has jumped to 30.2 percent, the fastest in more than a decade, as global food prices have surged and the government has increased social spending.
The central bank lifted its main interest rate to 12 percent from 10 percent last month as inflation accelerated. The bank will not raise it more, said Stelmakh.