Holovchenko A.,Vlasenko M.O., Mudrenko A.A.

Oles Honchar Dnipropetrovsk National University, Ukraine

ACTUAL PROBLEMS THE EXCHANGE MARKET IN UKRAINE AND THE WAYS OF THEIR OVERCOMING

Nowadays social-economic development of the world, regardless of the power of national economies, financial systems, the degree of integration ties and other factors, is largely due to the modern and future monetary policy. The exchange rate policy of Ukraine in 2011 provided a gradual easing of regulatory restrictions and a gradual growth of the exchange rate flexibility in order to renovate the country’s financial system. At the same time the National Bank of Ukraine took into account the necessity to prevent sharp fluctuations in the exchange rate of hryvnia, projected dynamics of which is largely ensured by stabilization capabilities of international reserves.

During last year, the exchange rate was kept almost unchanged as a measurement of the external value of domestic currency in 2010 the exchange rate of the Ukrainian hryvnia to the U.S. dollar in the interbank foreign exchange market rose by 0.38% – to 7.9617 UAH per USD. In the first quarter of 2011 the upward trend continued and an increase was 0.3% to 7.96 UAH per USD. The dynamics of the foreign exchange market in 2011 directly depended on the balance of the foreign currency general flows in favor of Ukrainian residents as well as their own external payments. Thus the main factors and components of these currency flows are:

– The overall rate of global economic recovery;

– The world price movement for traditional commodity groups of Ukrainian exports;

– The volumes of foreign loans, which directly affect the ability to meet  external debt liabilities on time;

- Maintain cooperation with the ICF under the financial program "Stand-by";

- Possible changes in Ukraine's sovereign ratings.

 Economic development of any country is impossible without creation of an effective financial and monetary system. An integral part of this system is a monetary-financial subsystem which includes residents and non-residents activity in the country’s territory and it is connected with the movement of currency values ​​in any form.

The use of currency values ​​requires certain regulations from the government and the Central Bank. In this regard, the role of the national currency legislation in determining the order of foreign currency circulation taking into account the necessity to ensure the priority of the country’s currency, protection of its purchasing power and resolution of other factors which affect the national currency convertibility is becoming more and more significant.

The exchange rate control should provide its regulation, taking into account the rate of domestic inflation and exporters’ interests. The latter is more important for countries that do not have significant foreign investment and access to external credits, and therefore the exporters are the main source of foreign currency. Only market methods should be used to carry out such a regulation.

The National Bank should immediately provide an accumulation of gathering sufficient foreign exchange reserves in order to be able to stabilize the exchange rate (or ensure its smooth reduction according to the growth of domestic prices) for a long period of time.

As a strategic direction the creation of favorable terms to use country’s foreign exchange resources by exporters (both to purchase raw materials and long-term investments) should be considered.

Monetary policy should take into account the possibility of increasing of exchange rate flexibility that will reflect changes in supply and demand in the foreign exchange market. The official exchange rate to the U.S. dollar should be set on the basis of its quotations in the interbank market that helps to create an objective assessment of currency risks in society.

 Foreign exchange interventions of the National Bank should include the need for inflationary purposes, smoothing sharp fluctuations in exchange rate and increasing of international reserves to a level that will provide the necessary protection of the national economy from adverse external shocks.

It’s necessary to keep more preferential conditions for the formation of required reserves for the funds in local currency in comparing with the funds in foreign currency. In the process of economic reforms in Ukraine, formation of a new system of state regulation of economy, finance and banking areas and domestic foreign exchange market in particular, significantly fell behind the rate of their liberalization. As a result the country exports capital by passing the operating and legal norms, it can be done quite legally without breaking the law because of gaps in legislation.

 To curb capital flight from the economy it is necessary to develop a strategic program and tactics, so that capital "escape" will not be profitable. First of all, it is necessary to ensure socio-economic and political stability in Ukraine and protection of property rights.We need legal guarantee control to insure business and political risks, unanticipated actions of the state. There are certain the targets for which achievement it is vital to impose a restriction on capital flows: the maintenance of domestic savings, maintaining domestic tax base, setting the correct sequence of actions towards economic liberalization; reducing exchange rate fluctuations and diminishing the frequency and strength of speculative transactions. At present, the domestic foreign exchange market is characterized by a wide range of operations, including arbitrate ones. This brings it closer to the EU standards and helps to implement the major strategic objective set by law, to ensure stability of the national currency.