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Last year, the hryvnia devalued by 19.4% against the dollar and by 31.5% against the euro. This was stated by the co-author of the study, founder of the Growford Institute, adviser to the Minister of Finance of Ukraine, member of the Council of the National Bank of Ukraine in 2014-2015 Vitalii Lomakovych during the presentation of the review of the monetary stance of Ukraine in 2020 at the Gorshenin Institute.

 “We have analyzed in detail whether the NBU had fundamental grounds for such deep devaluation of the national currency in 2020. As it turned out, in fact there were no such grounds. Because the current account surplus of USD 6.6 billion fully offset the capital outflow from the financial account which was USD 4.6 billion. That is, the consolidated balance of payments was positive and amounted to USD 2 billion. In addition, the NBU reserves grew by USD 3.8 billion for 2020. The negative trade balance also dramatically decreased: from USD 12.5 billion for 2019 to USD 1.7 billion for 2020. That is, we understand that the hryvnia devaluation by 20% against the dollar and 31.5% against the euro was quite artificial. And this is important with respect to the fact that when investors, who we talk so much about, want to enter Ukraine, they look at how volatile the exchange rate of national currency is,” the expert emphasized.

According to the co-author of the study, the Head of the money markets department of the Growford Institute, Mykhailo Dzhus, the NBU could and can control the exchange rate.

“Starting the year at an excessively revalued level (23.69 UAH/USD) in March, the hryvnia rapidly depreciated to 28.18 UAH/USD, thus compensating for the full strengthening in 2019. NBU sold about USD 2.5 billion and met the demand for cash currency. At the same time, there was a radical easing of the leading central banks’ policies, which has calmed panic in financial markets and reduced pressure on the currencies of developing countries. In total, this caused an adjustment of the exchange rate in the second quarter to the level of 26.5-26.7 UAH/USD. Later, the NBU actually supported the devaluation trend and in August, under conditions of devaluation, did not intervene at all, but, on the contrary, bought foreign currency,” Mykhailo Dzhus said.

Let us recall that on March 3, the Growford Institute presented a review of the state of Ukraine’s monetary stance in 2020 at the Gorshenin Institute.