Ukrainian exporters are hoarding about $9 billion in their dollar accounts, the sale of which would easily support the hryvnia, central bank Chairman Volodymyr Stelmakh said on Thursday.

The hryvnia currency hit yet another historic low on Thursday of 7.68-7.7/$ and has lost about 65 percent of its value since September. Central bank officials have said the market is close to balance and should settle at around 7.5/$.

`A rule obliging exporters to sell (their dollars) has been taken away and now they are refraining from selling the currency. There is something like $9 billion circulating around,` Stelmakh told journalists.

`If they were on the market, then there wouldn`t be any problems,` he said after a meeting between Prime Minister Yulia Tymoshenko and commercial banks. He made no mention of reintroducing a rule that obliged the sale of exporters` dollars.

The central bank has spent about $7.7 billion between September and November on trying to prop up the hryvnia. Nevertheless, the currency has fallen from about 4.7 to the dollar at the start of September.

The hryvnia began weakening when investors converted their hryvnia investments into dollars as the credit crisis spread and on poor regional sentiment after Russia`s war with Georgia.

Exporters also began to earn less as the global slowdown dampened demand for steel and chemicals. But as the hryvnia`s fall accelerated, people began to buy dollars in excess to guard against further weakness, compounding the situation.

`We have three problems -- withdrawals from foreign currency deposits, the problems with the cash market continue, meaning people are buying more than they are selling, and the third problem which is that those who have foreign currencies are refraining from selling them,` Stelmakh said.

At the end of November and in December, the bank changed tact from direct interbank market intervention to selling dollars at special auction -- the fourth was held on Wednesday.

Dealers said demand dropped at the auction because the central bank gives such a small amount of time -- an afternoon -- for banks to organise funds with their clients and propose a bid rate and raised the minimum volume of dollars to be sold.

On Wednesday it met 66 percent of demand, selling $90.4 million, against 21.5 percent of its demand through sales of $93.3 million a week earlier.

The chairman of the board of one of Ukraine`s largest banks, UniCredit`s Ukrsotsbank, said the central bank has decided to change that system and suggest a rate or range for the dollar as it had done in its first auction and in interventions.

`A new central bank system of selling the currency will be introduced within days ... It will be almost exactly like it used to be -- there will be some sort of range,` Boris Timonkin told journalists after the meeting.

He could not specify whether this meant a return to intervention or suggesting a range at auctions.

Reuters via Forbes