Sunday, 27 June 2010

Lytvytskyi for further hryvnia strengthening with inflation below 1 percent in June

Head of the NBU Advisers Group Valeriy Lytvytskyi favours further hryvnia strengthening to dollar in the Interbank foreign exchange market provided June inflation stands below 1 percent, he said at a press-conference.

"I say if inflation is low in June or we have deflation, why the market cannot strengthen hryvnia? If we achieve economic growth or inflation is less than 1%, I advice not to hinder market in this direction," Lytvytskyi emphasized.

However, he did not specify what rate he considers appropriate for hryvnia strengthening. If dollar demand exceeds supply in the Interbank foreign exchange market, NBU's gold reserves may increase by USD 31 billion, according to Lytvytskyi.

"By today our reserves had valued at UAH 29.408 billion. Yesterday we bought USD 7 million. We can test UAH 31 billion currency holdings in this half-year or in July. UAH 31 billion is our reserves at the beginning of the 2009," the expert noted. The banker submitted estimates of GDP growth over the five months of the current year and predicted its rate for 2010.

"GDP has been up 5.8% over the five months. It may achieve a 3.7- or even 4-percent by the end of the year," Lytvytskyi noted. At the same time, he expressed concern that growth of nominal GDP and a rise in prices may fuel inflation.

As Ukrainian News reported, hryvnia rate had strengthened by 0.89% from 7.9800 UAH/USD to 7.9095 UAH/USD in the Interbank foreign exchange market since the start of 2010.

The Ministry of Economy expects the June inflation to average up to 0.5%.

President Viktor Yanukovych and Prime Minister Mykola Azarov assess GDP growth at 6.1% in January-May.

The national budget-2010 envisages GDP growth of 3.7%.

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