Even NBU Governor Valeriya Hontareva cannot buy dollars that the central bank sells to commercial banks

For the moment NBU Governor Valeriya Hontareva and ordinary bank clients can only see the rates offered at currency exchange outlets

Photo: Ukrainian photo

Last month the interventions of the National Bank of Ukraine to support the hryvnia totaled US $735 mn. Direct interventions for the purchase of the reverse flow gas for Naftogaz of Ukraine accounted for the larger part of this amount – US $450 mn. The NBU sold another US $280 mn to support the market and counter cash, NBU Governor Valeriya Hontareva told journalists yesterday at a press conference. Also, at the beginning of October, the regulator performed an intervention in the amount of US $200 mn, of which US $60 mn were sold to provide cash to bank tills. “All banks […] should fully report about their transactions. We set such a small limitation of US $200 so they do not set indicative rates at currency exchange points, but indeed can sell hard currency at those rates. That is why we can now go to any bank and find out what the situation is. If the bank does not offer hard currency to its clients having purchased it from us, this will be a serious reason to penalize the bank,” Hontareva stressed.

A show gone awry

As a proof of her words, the NBU governor proposed to journalists to go to a bank with her and buy US $200 after the press conference. An office of Sberbank of Russia was the closest one. Hontareva confidently walked into the bank followed by a crowd of journalists and cameramen. The idea was that the head of the NBU press service Inna Hordiyenko, not Hontareva, would try to purchase dollars. She asked the cashier to sell her US $200. Most likely the cashier did not have this amount as she could not utter a word, but only reacted with fear to the presence of the NBU governor, journalists and cameras. “We want to buy US $200. Why are you acting as if you can’t hear me? Call your manager,” said Hontareva. The woman behind the counter, however, remained silent and nervously tried to dial some number on the phone. Having stood there for around five minutes Hontareva left the bank and advised journalists to go around other bank offices in search of hard currency.

At the same time, CEO of Ukrgazbank Serhiy Mamedov assures that the banks have hard currency. “The fourth NBU auction was held and the banks received hard currency, replenished their cash volumes and on Friday afternoon began selling it. The approximate volume of hard currency distributed for sale was around $250,000 per day. On Friday we sold US $175,000. That is why everything depends on how you organize the work. I think that all banks will become active and we will see more sales of $200 starting from today,” Mamedov believes.

The most important thing is that these amounts do not turn into US $1,000-2,000 later and then get resold on the black market. Since there is no cash available in banks for exchange even after NBU interventions, experts believe that the black market is where it ends up. “The black market is forming. The difference of the rates between the black and official forex market is increasing and a multitude of exchange rates is being set,” complains former NBU Deputy Governor Serhiy Yaremenko.

A good beginning makes a good ending

Despite criticism, the NBU is planning to continue selling dollars to the banks at a beneficial rate. The NBU will hold another auction for the sale of US $100 mn this Thursday, said Hontareva. Also, the banks will be able to purchase currency in the total amount of US $200 mn to cover client contracts at an auction on Friday. “We will thoroughly control all the banks, because in order for a financial institution to acquire hard currency from us, it must have sufficient hryvnia for pre-payment,” said Hontareva. “That is why it is very interesting to see which banks do not sell it. Maybe these are indeed those that cannot purchase it in the first place. Then, they will become the NBU’s clients for their withdrawal from the market as insolvent banks.”