Bad news for travelers to Ukraine

[Mir]

Reuters, Wednesday May 21 2008 (Adds analyst, S&P, dealer, details)
By Sabina Zawadzki
KIEV, May 21 (Reuters) - Ukraine's central bank has strengthened the official rate of the hryvnia to 4.85 to the dollar from 5.05, according to the bank's Web site on Wednesday, but no details about future policy were given.
The bank has been under pressure to revalue or liberalise the hryvnia after inflation began rising last year, hitting 30 percent annually. Ratings agency Standard & Poor's immediately called the bank's move a step towards curbing price rises.
"Liberalising the exchange rate regime should help to curb inflation of tradeables, and in particular commodities such as gas and food, which are priced in dollars," the agency said in a statement. It has a rating of BB- for Ukraine.
"It is more or less what the market has been trading the past few days. It's a first step," BNP Paribas currency strategist Elisabeth Gruie said.
"It's clearly not going to be enough. I would say they would need another five to 10 percent to tackle inflation," she said.
The bank had kept the hryvnia in a tight range of 5.00-5.06 since 2005, within a wider target of 4.95-5.25 but traders said it stopped intervening in February-March.
The hryvnia had been hovering around 4.7-4.8 since then, but soared further in recent days to 4.6 to the dollar after comments from various central bank officials indicating a revaluation soon. On Wednesday, the hryvnia traded at 4.54/$.
The bank had said that a news conference was due on Thursday at 1400 GMT after a meeting of the policy council.

Also the cost of airtravel to Kiev has gone up considerably (at least from UK airports)

[aikorob]

My wife just returned from 2 months in Odessa--she said street prices hit 3.5 to the dollar several times while she was there.

[ScottinCrimea]

We send money regularly to my step daughter in Simferopol and as of last week she was getting around 4.5 to the dollar.  There are rumors that the goal is to gradually drop it to a rate of 2.5 to the dollar.

[wxman]

Just and update. The board overroad the veto. What a mess.


KIEV, May 22 (Reuters) - Ukraine's central bank council vetoed on Thursday a decision to revalue the hryvnia to 4.85 per dollar from 5.05, Interfax Ukraine news agency reported, quoting an unnamed member of the council.

"The central bank council, with one abstention from (central bank chairman Volodymyr) Stelmakh, vetoed the decision of the board on the hryvnia's revaluation," Interfax quoted the council member as saying.

Ukrainska Pravda, a respected internet agency, also said the decision had been vetoed at a council meeting.

[wxman]

The move to revalue the currency against the dollar will have little effect on inflation.  If it were only that simple.


http://in.reuters.com/article/asiaCompanyAndMarkets/idINB2644720080522

[wxman]

Even more bad news for the Ukraine economy.

http://www.forbes.com/afxnewslimited/feeds/afx/2008/05/22/afx5038168.html

from the article:

"A stronger hryvnia will, moreover, stimulate import growth and squeeze the margins of exporters, which are already under pressure due to the rising price of gas, the ratings agency added.

This process will accelerate the widening of the Ukraine's current account deficit from last year's 4.2 percent of GDP towards 10.3 percent of GDP in 2009, S&P said."


A deficit of 10.3% of GDP can only lead to disaster if the trend continues.

[ScottinCrimea]

Ukraine's not the only one facing difficulties.  This quote from the first article was interesting:

"Over the coming months, we expect a continuation of the divergence between 'winners' and 'losers'," said Akber Khan, head of emerging markets equity focus at Deutsche Bank.

"Among 'winners', we will see commodity-exporters, countries that are not reliant on tapping capital markets to fund their growth, those with solid fiscal positions and those with limited exposure to the US or European consumer."

"In EMEA this will be countries such as Russia, the Middle East and to a smaller extent, Poland. Those at risk are on the other side of these trends and include countries such as Turkey and Hungary."

Maybe it's time to convert my dollars to rubles?

[wxman]

If your a country with oil, you are going to be rolling for the next several years. On the futures market, oil was selling for $142 a barrel delivered in 2016. Obviously not many are afraid that oil will crash, and are actually planning for much higher prices, thus buying now for future use.  $5 dollar a gallon gas will look cheap by then.

[msmoby_ru]

If your a country with oil, you are going to be rolling for the next several years. On the futures market, oil was selling for $142 a barrel delivered in 2016. Obviously not many are afraid that oil will crash, and are actually planning for much higher prices, thus buying now for future use.  $5 dollar a gallon gas will look cheap by then.

Monty Pyton -esque retort....   $5/ gall ?  I remember when we paid $5/ gall ...When me Dad were a nipper ( very young)

Seriously, Diesel is $12/gall and petrol is over $10/gall in the UK, and the petrol ( gas) tanker delivery drivers went on strike, so we couldn't BUY any, anyway..

One guy was charging £1.99 / litre for gas, yesterday.. that's about $18 / gall  ( he said "it's to stop panic buying".. and his fellow villagers will no doubt charge double for his beer in the Pub !

Traffic volumes are down 15-35% on UK roads and 4WD sales just fell through the floor.

Prices are rising everywhere - oil / food / home loans..  but not house prices .... 

Mr Brown ( who so desparately wanted Tony Blairs job ) has become Prime Minsiter at a lousy time, and tells us he is "mates" with George Bush .. so everything's going to be fine..!

 

Anyone know if the housing boom slowed in Kiev / Moscow, yet? ..