NBU plans to expand monetary base by 6% in 2009

National Bank of Ukraine First Deputy Chairman Anatoliy Shapovalov said that the NBU’s board approved of plans to increase the monetary base 6% in 2009, Interfax reported yesterday. Even though the government’s loan agreement with the International Monetary Fund theoretically allows for the NBU to expand the monetary base by a much wider margin, Shapovalov said that the NBU will instead pursue a tougher policy. Andrii Parkhomenko: We think that this move is aimed at curbing growth in the hryvnya supply to prevent UAH depreciation in autumn. Given that the IMF demands more flexibility in hryvnya exchange rate, the central bank has to apply to other instruments than direct intervention on the currency market in order to curb hryvnya depreciation.