Yesterday, a very interesting and very revealing event took place in the central building of the NBU at 9 Instytutska Street. At the initiative of the management of the National Bank's currency department, a meeting was held with the heads of the largest financial companies that carry out currency exchange.

During the meeting, NBU representatives emphasized that the current exchange rate fluctuations negatively affect the overall situation in the country, in particular, political stability. The National Bank of Ukraine, as the regulator responsible for ensuring macro-financial stability, intends to take all possible measures to preserve it. In this regard, the NBU appealed to financial companies with a strong recommendation to limit the selling rates of the US dollar in their branches.

The following procedure for setting rates is proposed: the selling rate of the US dollar of two state-owned banks – PrivatBank and Oschadbank – is taken as a basis. 0.5% is added to the corresponding selling rate. The resulting value is used as a benchmark for setting the selling rate of the US dollar by financial companies.

NBU representatives clarified: this restriction currently applies exclusively to the US dollar. These recommendations do not yet extend to other foreign currencies, in particular the euro.

Well, we can congratulate ourselves. The National Bank first spent billions of dollars a week trying to keep the dollar exchange rate at one level and not provoke panic among Ukrainian bank depositors, and now has returned to the old “proven” administrative methods.

At the same time, as it became known to the “Kurs Ukrainy” portal, these recommendations to limit the dollar selling rate were addressed exclusively to financial companies [large networks of currency exchange points – Ed.]. This restriction does not apply to banks. However, representatives of the currency department have already called all major banks and strongly recommended “taking a sensible approach to the issue of exchange rate formation.”

What will this lead to? With a high degree of probability – to the disappearance of dollars from free sale and the revival of the “black currency market.” And as a consequence, to galloping growth of the dollar exchange rate, now solely on hype and loss of confidence in the national currency.

How well it all started…