Ukraine cbank to continue with unlimited FX action

12:27, 31 October 2008
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By buying and selling unlimited amounts of dollars

Ukraine`s central bank will continue to intervene in currency markets by buying and selling unlimited amounts of dollars, First Deputy Chairman Anatoly Shapovalov told Reuters on Friday, Reuters reported.

The central bank has been intervening every day for the past two weeks to try to prop up the hryvnia, which slipped on Wednesday to a historic low of 7.2 to the dollar. It has since bounced bank and was quoted 5.86-5.95 on Friday.

Shapovalov said a requirement for banks to sell the dollar at the rate they bought from the central bank would remain in force for several days. It offered to sell dollars at 5.95 hryvnias on Friday and at 6.05 on Thursday.

The bank is trying to bring interbank rates for the hryvnia back in line with the rates at which it intervenes, after market rates reached 7 to the dollar earlier this week when the bank was selling limited amounts of dollars at 5.7.

"We intervened yesterday, selling $500 million dollars. We therefore demand that if they bought from central bank reserves, they then meet client orders at that rate and their profit is the commission," he said.

"Today, we will send a letter saying that dollars bought today at 5.95 hryvnias have to be sold at 5.95 ... This is meant to calm the market. At the very least, this will happen today, tomorrow, and then we will see."

He said he expected the bank to sell fewer dollars on Friday than the $500 million on Thursday.

The office of President Viktor Yushchenko on Thursday criticised the bank`s failure to stabilise the hryvnia despite selling $5 billion in the past three weeks.

Central bank reserves stood at $37.5 billion as of end-September. Officials have since then have said the reserves stood at $33-34 billion.

Reuters via Guardian

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