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NBU chief promises to keep independence
Journal Staff Report

KYIV, July 20 - Ukraine's new central bank governor promised on Monday to maintain the independence of the central bank and cooperation with the International Monetary Fund while continuing to cut interest rates, Reuters reported.

Governor Kyrylo Shevchenko's words may have been intended to reassure the market after the turbulent exit of his predecessor rattled investors and prompted the government to postpone a Eurobond sale.

He was installed last week after his predecessor, Yakiv Smoliy, quit, citing political pressure. It came a month after Ukraine had secured a new $5 billion IMF deal, contingent on the central bank remaining independent.

"The National Bank will remain an independent institution. Decisions will continue to be made professionally and economically," Shevchenko said, speaking alongside President Volodymyr Zelenskiy.

"The NBU (National Bank of Ukraine) should continue the policy of lowering the discount rate, which, as a result, will lead to cheaper loans for the final borrower," he added.

Analysts said the policy objectives are in line with expectations, but some important questions remain unanswered.

Nothing is wrong, but the market asks: Will the NBU opt for monetary emission? Will the NBU let the exchange rate of the hryvnia fall? What does balanced currency policy mean? Will Ukraine fulfill the IMF conditions? Anders Auslund, a senior fellow at the Atlantic Council, said.

Meanwhile, the hryvnia is falling slowly, he added.

Smoliy resigned at the start of July, complaining the central bank was being pressured to take bad decisions and that its officials were being harassed. Zelenskiy's government has consistently denied trying to exert undue influence over him.

Smoliy had brought interest rates down to their lowest level since independence in 1991, to 6%, but was criticised for not lowering them more quickly. The first rate-setting meeting under Shevchenko's leadership is due on Thursday.

Shevchenko, 47, born in Russia, a career banker who worked briefly in a mine, had been tipped by local media to become the next governor since February.

In the past, Shevchenko has criticized monetary policy under Smoliy for being too hawkish, allowing the currency to appreciate and push up import costs. (rt/tl/ez)

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Currencies (in hryvnias)
  14.08.2020 prev
USD 27.41 27.53
RUR 0.372 0.375
EUR 32.42 32.56

Stock Market
  13.08.2020 prev
PFTS 500.1 500.1
source: PFTS


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