UPDATE 3-Ukraine c.bank sees hryvnia roughly stable

Published 09/09/2010, 11:54 AM
Updated 09/09/2010, 12:00 PM

* C.bank intervention has halted hryvnia's fall

* Adjusts intervention rate

* But sees little appreciation potential in the long run (Adds c.bank comment)

KIEV, Sept 9 (Reuters) - Ukraine's central bank, seeking to clarify its policy towards the hryvnia exchange rate following a slew of mixed signals, said on Thursday the currency would remain broadly stable against the dollar.

The bank, which has stepped in this week to support the hryvnia in a series of interventions, said its chairman Volodymyr Stelmakh's earlier comments suggesting future depreciation had been misunderstood.

Stelmakh said on Wednesday that the currency, which now trades at about 7.92 per dollar, would probably slip to 7.98-8.0 to the dollar by the end of 2010. [ID:nLDE6871AF]

But his senior advisor Valery Lytvytsky told Reuters on Thursday the figure was a floor for possible devaluation rather than a forecast of the exchange rate.

"Volodymyr Stelmakh has said (the hryvnia) would not go lower than that but that does not mean it cannot perform better and it can perform better," Lytvytsky said.

Separately, the Ukrainsky Novyny news agency quoted Stelmakh as telling a meeting of government officials and regional governors on Thursday: "The (exchange) rate ... will be stable. (...) Of course, we do not foresee a large appreciation."

Stelmakh did not say what time frame he was referring to but made his comments in a speech covering the bank's outlook for the next year.

"I think the central bank is trying to send the right signal to the market," said Renaissance Capital analyst Anastasia Golovach. "They are saying they will allow more hryvnia volatility and I think this is good for the economy."

Allowing greater exchange rate flexibility is one of the terms of Ukraine's $15 billion deal with the International Monetary Fund agreed in July.

On Thursday, the central bank offered to sell dollars at 7.9200 hryvnias per dollar , down from 7.9269, the rate it had used on Tuesday and Wednesday to support the hryvnia which has been volatile since Sept. 1.

The bank has sold $133 million on the interbank market so far this week.

"The dollar is weakening (against the hryvnia), the quotes are still close to where the central bank is selling but we may go even lower," said a dealer at a large Ukrainian bank.

The hryvnia rose to 7.9150 per dollar on Thursday from 7.9265 at the end of the previous session, according to Reuters data, recovering further from a five-month low of 7.94 hit earlier in the week.

The hryvnia's steady appreciation during the summer came to a halt after a central bank reshuffle on Sept. 1 when Stelmakh's first deputy Anatoly Shapovalov replaced by younger banker Serhiy Arbuzov and prompted speculation of a change in the bank's stance towards the currency.

The devaluation, although very small compared to overall gains since February, has drawn analysts' attention as a potential signal of a longer-term shift. [ID:nLDE68519F] (Reporting by Natalya Zinets, writing by Olzhas Auyezov; Editing by Susan Fenton)

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