By Natalya Zinets
KIEV, March 17 (Reuters) - Ukraine's central bank stepped up its currency curbs on Tuesday, saying commercial bank managers would be held responsible for rates quoted for the hryvnia if they differed widely from an "average" rate set by the bank.
The central bank has sought to strengthen its hold over the currency since December after the hryvnia tumbled in the final months of 2008 on rising bank problems, a collapsing steel sector and growing worries over Ukraine's solvency.
Since the start of the year the central bank has tried to keep the rate at around 7.7 per dollar -- well below the 2008 peak around 4.5 per dollar -- though the hryvnia is quoted at about 8.2 on the interbank market.
The central bank first said last month that in its nearly daily interventions it would not sell dollars to banks conducting operations at a rate exceeding the "average" rate of transactions recorded the previous day on the interbank market.
And earlier this month, President Viktor Yushchenko's press service said he would "summon" the leaders of 25 banks which were "disorienting" the market through their rates.
In its latest letter issued to commercial banks on Tuesday, the central bank said the hryvnia rate had to be acceptable to both buyers and sellers, with only a "minor" difference between buy and sell rates.
"With the aim of preventing any broadening of the difference between buy and sell rates, we hereby oblige senior officials at licensed banks to take personal control over the setting of rates for purchase and sale of currency for hyrvnias," it said.
MANAGERS PERSONALLY RESPONSIBLE
"Senior officials at banks are to be held personally responsible for displaying information on currency rates on the bank's Web site or information systems. Rates must be based on the real circumstances on the interbank market."
The central bank said Tuesday's recommended rate stood at 7.9479, based on interbank transactions plus its intervention from the previous day -- a change from its "average" rate of 7.9421 the previous day.
Dealers said the real trading rate of the dollar on the interbank market was about 8.2 on Tuesday against 8.1 the previous day.
The central bank intervenes on the interbank market, selling dollars at discounted rates on Monday to Thursday and conducting a currency auction on Friday. Last Friday's auction included euros for the first time.
Dealers told Reuters they were no longer displaying their dollar/hryvnia rate because they feared punitive measures from the central bank.
"The clear trend on the market is that demand for dollars is outstripping supply," said one dealer.
"But banks do not want to make quotes on the interbank market because everyone, and that includes us, is worried about just what action the central bank might take."
He said banks were discussing hryvnia rates over the internet in defiance of a central bank ban on such activity.
"Things will soon reach a point where we will have to scrawl rates on a fence by hand," he said.
Another dealer said central bank action had rendered the notion of market operations meaningless.
"The very understanding of a market is now all but absent," he said. "It's hard to say where the market is when it's impossible to clinch a deal. We once had a single interbank currency market, now every bank is a market unto itself." (Writing by Ron Popeski; Editing by Ruth Pitchford)