(Releads with central bank chief's comments)
KIEV Aug 8 The National Bank of Ukraine will
keep selling dollars on the local foreign exchange market and
using other means to prevent excessive volatility in the
hryvnia, its head said on Friday.
After a six-month break, the central bank this week resumed
its intervention to stop any further hryvnia falls, central bank
chief Valeria Hontareva said, due to political instability as
Kiev forces fight separatists in the east.
In the first quarter the Ukrainian currency lost about 30
percent of its value and authorities say there are no
macroeconomic reasons for a further fall as the trade deficit
decreased significantly in January-May.
"The National Bank ... will not allow the market to wind up
this flywheel. We will not be a passive participant. We can
carry on (with interventions) to smooth out the market," she
On Friday the central bank offered to sell dollars at a
price of 12.60 hryvnia, compared with 12.26 hryvnia on Tuesday.
The hryvnia was quoted at 12.4950 to the dollar at around
0845 GMT, after closing at 12.45 hryvnia on Thursday.
Hontareva did not exclude the central bank using some
administrative measures if it failed to calm the market by
"Let's see how the market will react to the fact that now we
are intervening," said Hontareva.
"Since we can not carry big interventions (in the
currency), but at the same time having to stop the situation
unravelling, we will have to apply administrative measures in
the future," she said.
Hontareva did not elaborate on what kind of administrative
measures might be used.
The central bank prospects of selling foreign currency on
the market are limited by the size of its foreign reserves which
have shrunk to $16.07 billion from $38.4 billion over the past
three years, as well as by the requirements of the International
Monetary Fund (IMF) stand-by programme.
Ukraine is to receive $17.1 billion credit over two years
under an IMF programe.
Ukraine received the first tranche of $3.2 billion in May
and expects that a decision on disbursement of a second $1.4
billion tranche of aid will be adopted on Aug. 29.
Under the programme, the central bank must follow the
principles of a flexible exchange rate and avoid reducing the
reserves below the level agreed with the Fund.
"Today, I hope that we can do without the additional
administrative measures", said Hontareva.
(Reporting by Natalia Zinets; Editing by Richard Balmforth and