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A Rallying Ruble
Posted on May 14th, 2009 Comments welcome Share/Save PrintLast autumn the wisdom of Russia’s managed devaluation was almost unanimously questioned by economists. But a few months on the approach seems to have paid off - on Wednesday the ruble reached a four month high of 31.9328 per dollar, gaining 13% since January and avoiding a sharp devaluation that would have spooked the population with memories of the 1998 crash.
Russia’s Central Bank (CBR) is optimistic that this upward trend will continue. In an interview with Bloomberg, CBR First Deputy Chairman Alexei Ulyukayev predicted that the ruble will gain more than 6% this year against the dollar-euro basket used to manage its swings. Sergei Shvetsov, Head of Financial Market Operations at the CBR, added that the ruble will be bolstered through the end of the year because Russians will start selling the foreign currency they have been hoarding since the start of the crisis - a whopping $70 billion.
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Celebrating Another Victory: IMF Approves Second Loan Tranche for Ukraine
Posted on May 12th, 2009 Comments welcome Share/Save PrintBy Yulia Sobko, Financial Communications and Investor Relations Manager, The PBN Company, Kyiv
On the eve of Victory Day, the IMF gave the green light to disburse the second tranche of its loan to Ukraine. The second tranche totals $2.8 billion, bringing the IMF’s total loan to $7.3 billion to date.
Ukraine has had difficulties obtaining this second tranche. The original IMF loan agreement stipulated certain monetary and fiscal conditions to be met in time for the Q2 review for the second tranche, and many of those conditions became contentious domestic political issues. After some haggling over terms, the IMF has now met Ukraine part way, granting waivers on particularly controversial issues such as budget deficit and exchange rate, currency and import restrictions (which will now have to be removed promptly).
Under the revised terms, Ukraine is allowed a budget deficit of 4% of GDP in 2009, as opposed to the original requirement for a balanced budget, and the IMF has strongly recommended certain key structural reforms, including pension and tax reform. Ukraine’s National Bank has also committed to implement a flexible exchange rate policy and to discourage dollarization of the economy, which should mitigate the effect of external shocks on the economy and help focus monetary policy on inflation.
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Inflation is Key Concern for Ukrainians
Posted on April 6th, 2009 Comments welcome Share/Save PrintUkrainians view inflation as the country’s most pressing problem, a PBN-sponsored survey has found. When asked to identify their three top concerns, 61% of respondents highlighted inflation as their primary concern. Other particularly worrisome issues are:
- Political crisis (50%)
- Unstable exchange rate (36.4%)
- Unemployment (35%)
- Insufficient income to lead a normal lifestyle (35%)
- Indifference of government to problems of its citizens (32%)
- Fall in production (30%)
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