KIEV Oct 17 Ukraine's central bank will in
future sell dollars directly to a limited circle of banks rather
than at open auctions, an official said on Monday, in a bid to
combat speculative trades against the under-pressure hryvnia
The central bank has traditionally defended the hryvnia by
offering foreign currency at auctions that are announced in
advance and open to all lenders.
The local currency has slipped to 25 against the dollar from
8 since 2014, battered by two years of economic crisis and
conflict with Russian-backed separatists in the country's east,
and inflation jumped to 20-year high in 2015.
"We plan to launch a faster and more secret tool to respond
problems, speculative attacks on the hryvnia", Serhii
Ponomarenko, director of the central bank's open market
operations department, told journalists.
He said it took hours to announce and conduct an auction
while direct intervention could be done in minutes.
"There will not be any announcement in advance. We will
simply submit our request directly to 15-20 banks (the biggest
market players) asking them about their quotes ... and then - we
will get a deal at the best price," he said.
He said such hidden interventions would help make better use
of Ukraine's foreign reserves.
The central bank was forced to abandon its fixed exchange
rate policy at the start of 2015 when its international reserves
fell to $5.6 billion, barely covering one month of imports.
Reserves had increased to $15.6 billion as of Oct. 1 mainly
due to International Monetary Fund loans. Kiev has received $7.7
billion of $17.5 billion that the Fund has promised to disburse
in support of economic reforms.
Corruption remains the main obstacle to the foreign currency
inflow Ukraine needs to cover its current account deficit, pay
debts and boost international reserves.
(Reporting by Natalia Zinets; editing by John Stonestreet)