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YULIA TYMOSHENKO
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Irregular Goings On at the Central Bank
14 September 2009
Published in
Inform
issue #124
See the full issue here.
Oleksandr Savchenko, the Deputy Chairman of the National Bank of Ukraine (NBU), submitted his resignation last week in protest over political interference by President Viktor Yushchenko into the operations of the central bank. The resignation coincides with an investigation by the Interior Ministry into alleged illegal currency speculation by senior officials within the bank.
Speaking at a press conference in Kyiv, Mr Savchenko said, “I have filed my resignation. It would be dishonourable to remain silent and wait. The NBU is not independent, it is engaged in politics, and sometimes it is being involved in certain schemes and speculations.”
Alarmingly, Mr Savchenko accused senior NBU officials of speculation on the foreign exchange market, and refinancing commercial banks in such a manner that certain banks received larger shares, which they could direct to the currency market.
See the full issue here.
Oleksandr Savchenko, the Deputy Chairman of the National Bank of Ukraine (NBU), submitted his resignation last week in protest over political interference by President Viktor Yushchenko into the operations of the central bank. The resignation coincides with an investigation by the Interior Ministry into alleged illegal currency speculation by senior officials within the bank.
Speaking at a press conference in Kyiv, Mr Savchenko said, “I have filed my resignation. It would be dishonourable to remain silent and wait. The NBU is not independent, it is engaged in politics, and sometimes it is being involved in certain schemes and speculations.”
Alarmingly, Mr Savchenko accused senior NBU officials of speculation on the foreign exchange market, and refinancing commercial banks in such a manner that certain banks received larger shares, which they could direct to the currency market.
In December last year, Prime Minister Yulia
Tymoshenko complained about NBU officials engaging
in currency speculation and staging the collapse of
the national currency, the hryvnia, to benefit
businessmen linked to the president’s staff (see
Inform issue 98, 5 January 2009).
In the last four months of 2008 the hrvynia lost half its value against the dollar, at one time slumping to UAH 10 to the dollar from UAH 4.9 to the dollar in September 2008.
Not long after Ms Tymoshenko revealed the scam, parliament voted for the removal of Volodymyr Stelmakh the Chairman of the NBU. However President Yushchenko, who has ultimate responsibility for the central bank, dismissed the non-binding parliamentary motion.
Fresh currency speculation
It is hardly surprising that Mr Savchenko has opted to resign, particularly in the light of a fresh round of currency fluctuation.
Tim Ash, the respected Head of Research for CEEMA at the Royal Bank of Scotland, wrote in a research note, “In particular, it seems as though he has been unhappy that NBU support for the banking sector has led to liquidity simply being used to short the hryvnia, further complicating the NBU's management of exchange rate policy. He also indicated that he was upset with undue political manipulation of the NBU.”
Mr Savchenko advocates a trading band for non-admission of the hryvnia devaluation. He suggests a lower limit of the band should be UAH 6.05 to the dollar with an upper limit of UAH 9 to the dollar.
Last month, a British businessman based in Kyiv told Inform, “There is no reason behind the fluctuation of the hryvnia other than it being down to speculation by a corrupt few.”
Interior Minister Yuriy Lutsenko would appear to agree with him and said in a statement that he suspected NBU officials of “plundering hundreds of millions of hryvnia,” which caused a fall in the currency. In the past few weeks the hryvnia lost more than 5 percent against the dollar. It rallied to close on Friday at UAH 8.403 to the dollar, but only after intervention from the central bank.
Because Mr Lutsenko is a supporter of Prime Minister Tymoshenko, some commentators suggest that the whole issue has become politicised. Others, including Ceyla Pazarbasioglu, the International Monetary Fund (IMF) mission chief to Ukraine, have suggested that the political uncertainty in Ukraine is perhaps the root cause of the depreciation. “If the public don’t have any certainty as to what the policies will be and the implications for inflation, then people may elect to go into foreign currency,” said Ms Pazarbasioglu.
But a BYuT spokesman told Inform, “there is no smoke without fire.” The departing Mr Savchenko would appear to concur, describing the investigation by law enforcement agencies into the activity of the NBU to be expedient.
In the last four months of 2008 the hrvynia lost half its value against the dollar, at one time slumping to UAH 10 to the dollar from UAH 4.9 to the dollar in September 2008.
Not long after Ms Tymoshenko revealed the scam, parliament voted for the removal of Volodymyr Stelmakh the Chairman of the NBU. However President Yushchenko, who has ultimate responsibility for the central bank, dismissed the non-binding parliamentary motion.
Fresh currency speculation
It is hardly surprising that Mr Savchenko has opted to resign, particularly in the light of a fresh round of currency fluctuation.
Tim Ash, the respected Head of Research for CEEMA at the Royal Bank of Scotland, wrote in a research note, “In particular, it seems as though he has been unhappy that NBU support for the banking sector has led to liquidity simply being used to short the hryvnia, further complicating the NBU's management of exchange rate policy. He also indicated that he was upset with undue political manipulation of the NBU.”
Mr Savchenko advocates a trading band for non-admission of the hryvnia devaluation. He suggests a lower limit of the band should be UAH 6.05 to the dollar with an upper limit of UAH 9 to the dollar.
Last month, a British businessman based in Kyiv told Inform, “There is no reason behind the fluctuation of the hryvnia other than it being down to speculation by a corrupt few.”
Interior Minister Yuriy Lutsenko would appear to agree with him and said in a statement that he suspected NBU officials of “plundering hundreds of millions of hryvnia,” which caused a fall in the currency. In the past few weeks the hryvnia lost more than 5 percent against the dollar. It rallied to close on Friday at UAH 8.403 to the dollar, but only after intervention from the central bank.
Because Mr Lutsenko is a supporter of Prime Minister Tymoshenko, some commentators suggest that the whole issue has become politicised. Others, including Ceyla Pazarbasioglu, the International Monetary Fund (IMF) mission chief to Ukraine, have suggested that the political uncertainty in Ukraine is perhaps the root cause of the depreciation. “If the public don’t have any certainty as to what the policies will be and the implications for inflation, then people may elect to go into foreign currency,” said Ms Pazarbasioglu.
But a BYuT spokesman told Inform, “there is no smoke without fire.” The departing Mr Savchenko would appear to concur, describing the investigation by law enforcement agencies into the activity of the NBU to be expedient.