In his recent interview with Forbes Ukraine, the head of the National Bank of Ukraine (NBU), Andrii Pyshnyi, emphasized the importance of the exchange rate as one of the main tools that help absorb economic shocks in the country. He noted that the responsibility for exchange rate stability, price and financial stability rests with the NBU, in accordance with the Constitution of Ukraine.
The main functions of the NBU
Pyshnyi emphasized that the exchange rate of the hryvnia is not determined by the International Monetary Fund (IMF) or the government; this is exclusively the responsibility of the National Bank. He explained that the hryvnia exchange rate should act as an absorber of shocks that may arise due to internal and external factors. For this purpose, the NBU introduced a regime of managed flexibility to ensure the stability of the foreign exchange market.
"Supply and demand, the perception of currency risks must return to all economic agents - business, government, population. This makes us strong," he emphasized.
Impact of devaluation on inflation
Pyshnyi also noted that hryvnia devaluation has a critical impact on inflationary dynamics. The NBU seeks to return inflation to the target of 5%. He noted that accelerated inflation negatively affects the attractiveness of hryvnia assets, which remain one of the bank's strategic priorities. This allows the internal debt market to function effectively, which is important in the context of the budget deficit.
Attractiveness of hryvnia assets for the population
Separately, Pyshnyi emphasized that the National Bank of Ukraine is working to encourage the population to keep their savings in hryvnias, which should be protected from inflation. "Your deposit that you made today should allow you to buy the same amount of goods as today, compensating for this at the expense of the deposit rate," he noted, adding that deposit rates remain positive even after a moderate devaluation.
