In anticipation of further devaluation Ukrainians are turning to foreign currency

25 september 2014 | Nezavisimaya Gazeta

Ukrainian economy is going through a hard period even without taking into account the possible closure of the Russian market. This is clearly showen by the recent macroeconomic indicators.

Leonid Grigoriev
Leonid Grigoriev
Chief Adviser to Head of the Analytical Center

Journalists from “Nezavisimaya Gazeta” refer to a study made by the expert of the Analytical Center in the article “Moscow threatens to bury the Ukrainian economy”, which says that the aggravation of the recession in Ukrainian economy took place before the conflict in the East of the country and the beginning of the large-scale military operations - in the 1st quarter of 2014. Annual inflation in August accelerated to 14%, and by the end of the year it is, according to the expectations of Ukrainian Ministry of Finance, will reach 19%. Industrial production in July fell by 12% compared to July of the last year. Mechanical engineering decreased even more - almost by 24%.

The devaluation of the hryvnia has played a special role in the continuing fall of the Ukrainian economy. For the period from February to April the Ukrainian hryvnia plummeted down to 11.5 UAH per USD (compared to 8.91 in the 1st quarter). In summer, the national currency continued to fall to the level of 13 UAH per USD. “At the moment, hryvnia exchange rate on the black market is 20 UAH per 1 USD. Anticipating further devaluation, the population tends to turn to foreign currency”, - Chief Adviser to the Director General of the Analytical Center, Leonid Grigoriev told “Nezavisimaya Gazeta”.

The publication writes that, according to the Analytical Center, at the beginning of this year, the gross external debt of the country has exceeded 142 billion dollars, but only a quarter of this amount falls on the public external debt (41 billion dollars). However, according to the experts, Ukraine will be able to live through this year.