By KYIV. Dec 21 (Interfax-Ukraine) – The current regime of a fixed official exchange rate is a rational solution in a military situation, and the existing difference between the official and the cash market rate of 10% is acceptable in the current conditions, Oleksandr Pysaruk, the CEO of Raiffeisen Bank (Kyiv), believes.
"The fact that we have several rates is objective. When there are restrictions on the movement of capital, there will always be a situation with several rates. The main thing is that the difference between them is stable and not very large," he said in an interview with Interfax-Ukraine.
According to him, when the spreads between the official and cash rates are more than 10-15% and continue to grow, this is evidence that the established fixed rate has outlived its usefulness, and then it is necessary to react, as the National Bank did in the summer, forcedly and belatedly, by devaluing official exchange rate by 25%.
"Today, I don’t see structural imbalances. Both exporters and importers complain. But if you really look, spreads with the cash market within 10% are more or less balanced. I don’t see the risk of devaluation this year," he described the current situation.
Pysaruk noted that the latest blackouts did not cause panic fluctuations in the exchange rate, which is a great example of the fact that the Ukrainians have adapted to everything.
He pointed out that the exchange rate is not just a function of buying and selling currency for export-import transactions, but it primarily depends on the country’s balance of payments.
"The acceleration of international financial assistance in the second half of the year balances the negative trade balance, including, among other things, the operations of Ukrainians abroad, as imports of services," he said, as once worked at the IMF and served as first deputy head of the NBU.
Commenting on the discussion about the need to return to a floating exchange rate, Pysaruk expressed the opinion that during the war there are no conditions for the normal functioning of the foreign exchange market.
"There are a lot of influencing factors: from the uncertainty with the situation with the grain corridor to the destruction of critical infrastructure, psychological aspects affecting depositors, etc. At the same time, I think we should consider switching to a floating exchange rate immediately after the war," the banker believes.
