May 2007
Ukraine considers abandoning currency peg
by Chloe Hayward, Lee Oliver
"Given Ukraine’s substantial foreign exchange reserves, this is in principle a good time for the country to move to a more flexible currency regime," says Martin Raiser, economic adviser in the World Bank country office for Belarus, Moldova and Ukraine in Kiev. "Assuming the current political uncertainty is quickly overcome, Ukraine has an opportunity to introduce more flexibility from a position of strength and so problems are less likely."
The hryvna is pegged to the US dollar and its value has been rigidly maintained in a narrow band between 5.00 and 5.06 since May 2005. The average January exchange rate was 5.0495. As a result, the hryvna has not been allowed to weaken against the dollar to the...
