KIEV, Dec. 1 – President Viktor Yushchenko said Monday the hryvnia was “deeply undervalued” and warned that any further devaluation against the U.S. dollar would force him to shake up the National Bank of Ukraine’s management.

This was Yushchenko’s most critical comment on the NBU’s actions since the hryvnia had started to face downward pressure in early October. The hryvnia lost about 50% of its value over the period and it was impossible to buy dollars on the street.

“The president gave the governor of the NBU days to stabilize the situation around the exchange rate,” Iryna Vannikova, Yushchenko’s spokeswoman, said Monday. “If the negative trends strengthen, the president will be forced to take tough personnel decisions.”

The NBU has been running a very controversial monetary and exchange rate policy this year, first letting the hryvnia appreciate against the U.S. dollar by 5% overnight at one point in May, later refusing to spend its forex reserves to support the hryvnia.

Yushchenko often blamed Prime Minister Yulia Tymoshenko’s populist economic policy in early this year for rising inflation and weakening hryvnia, but the tone on Monday had also put the blame on the NBU.

“When they ask me what’s the fair exchange rate for the hryvnia against hard currency I am confident that the hryvnia is deeply undervalued,” Yushchenko said speaking at ICTV television late Monday.

The hryvnia closed at about 7.40 to the dollar in trading between commercial banks on Monday, compared with 7.20 to the dollar on Friday, dealers said.

The NBU late Monday set the official exchange rate at 7.14 hryvnias per dollar, for the first time quoting the hryvnia at such a low value. The rate is used by exporters in tax settlements with the government.

Yushchneko, a former long-time governor of the NBU who had successfully introduced the hryvnia more than a decade ago, said panic was primarily responsible for the hryvnia’s plunge.

“The biggest component that hits the hryvnia is the psychological demand,” Yushchenko said. “When the psychological demand is at work, it means speculator is at work,” Yushcheko said asking the NBU to launchan attack that would hurt speculators.

“The key task for the NBU today is to dig in and to make an effective attack on speculators,” Yushchenko said. “I am convinced that this kind of maneuvering is awaiting by the business world and by an ordimary consumer.”

“We need to keep the exchange rate. We need to show that we have reserves.”

The NBU’s forex reserves dropped to $30 billion as of early November, down from $38 billion in early October, as the central bank has been sporadically making the interventions. Analysts said the intervention policy was not effective.

Yushchenko also urged key government officials and the NBU chief to more frequently show up at the television to explain the situation.

“The last recommendation is that the finance minister, the economy minister, the governor of the NBU must be on television everyday and to show to people that the trading goes on at normal pace, that investments come at normal pace.” (nr/ez)