OREANDA-NEWS On 18 February 2009 was announced, that the NBU sent the letter #38 to all commercial banks, forbidding them to sell the foreign currency at the exchange rate exceeding the market average. Otherwise the NBU will not sell foreign currency to commercial banks and may even recall the bank's interbank currency market trading license.

Millennium Capital sees the news to be NEGATIVE, since the artificial control over the exchange rate will restrict hryvnia devaluation only in the short run, while the supply of foreign currency will reduce significantly. Meanwhile, demand for foreign currency will remain the same due to the need to repay foreign currency denominated loans. The above will create downward pressure on the exchange rate. Therefore, the NBU’s next step to affect the foreign currency supply growth to avoid further hryvnia devaluation are further exchange rate controls directed on the increase of the foreign currency supply.

Millennium Capital is an integrated financial services provider. Established in 2000 by a group of professionals with solid background in securities and corporate finance, Millennium Capital is now one of the major investment banking institutions.