Ukraine president's office slams centralbank on FX policy

By Sabina Zawadzki

KIEV (Reuters) - An aide to Ukraine's president attacked the central bank on Thursday, accusing it of failing to stabilise the hryvnia currency despite selling almost $5 billion in three weeks of financial crisis.

The criticism by Oleksander Shlapak, President Viktor Yushchenko's top economic aide, followed a similar call to action by Prime Minister Yulia Tymoshenko on Wednesday urging the central bank to spend its reserves to stabilise the hryvnia.

Shlapak said the bank must introduce a transparent mechanism for intervention, amid bickering between the two political camps that again on Thursday put off debate on legislation needed to secure a $16.5 billion bailout deal with the IMF.

"Over three weeks (the central bank) has spent nearly $5 billion dollars of the country's reserves, but the market has felt no positive effect of this colossal intervention," Shlapak said in a statement on the presidential Web site.

The currency has been falling against the dollar for several weeks and lost almost 15 percent of its value on Wednesday, hitting a historic low of 7.2 to the dollar. On Thursday, it bound back to trade at 5.9-6.07/$.

Ukraine has signed a preliminary deal with the International Monetary Fund for the loan, some of which could be used to prop up the central bank's reserves.

The central bank has been intervening every day for two weeks to try to halt the hryvnia's descent. It offered buy and sell rates of 5.95/6.05 hryvnias to the dollar for the first time on Thursday.

"Clearly, the central bank has been spending the money in a far from optimal way," Shlapak said.