The Ukraine Hryvnia: Black Market Masks Decline
Mike (Mish) Shedlock | Feb 04, 2015 01:09AM ET
The Ukrainian central bank publishes the Banks Impose a 30% Foreign Exchange Fee .
The article notes that in the border towns in the Ternopil region, Lviv, and Transcarpathia, that people had been running to the nearest ATM in Romania or Poland to remove currency, at the official rate.
Customers used gold class preferential commissions for ATM transactions buying dollars for 16 Hryvnias, then selling the dollars at the black market rate that is as high as 21.5 Hryvnias to the dollar.
Ukrainian banks were getting killed on debit card and other exchange transactions, thus the support for a free-floating Hryvnia.
How Low Will It Go?
From 8 to 21.5 represents a 62.7% decline. And I suspect it won't stop there. Why should it?
A plunge from 8 to 30 would be a 73% decline in just over a year. And that's my initial guess barring some quick monetary rescue by the IMF.
If and when the Ukrainian National Bank does float the currency, other sites will note the "shocking overnight" plunge.
In reality, the plunge has already taken place, over time. The charts just don't show that yet.
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