16 Jun 2022 15:50

Agrarians ask Ukrainian govt to allow currency exchange at market rate due to loss of up to 30% of income

MOSCOW. June 16 (Interfax) - Ukrainian agrarians seek to sell their foreign currency earnings at the exchange rate set by Ukrainian commercial banks rather than the National Bank of Ukraine, as they are losing up to 20% of income due to the gap between the official and real exchange rates and another 10% due to the recent raise of the discount rate.

The Ukrainian Agribusiness Club (UCAB) and the Ukrainian Agrarian Association filed a respective petition to Ukrainian President Volodymyr Zelensky, Prime Minister Denys Shmyhal, National Bank Governor Kyrylo Shevchenko, and Agrarian Policy and Food Minister Mykola Solsky on Thursday, Ukrainian media outlets said.

They noted that the National Bank compelled banks on February 24, 2022, to buy foreign currency earnings of exporters at the official exchange rate, which was set at UAH 29.25 to the dollar on that day. At the same time, the commercial rate at which exporters and people are buying foreign currency from banks currently exceeds UAH36 to the dollar. As a result, agrarians lose about 20% of their income to the return of foreign currency earnings to Ukraine.

"Please note that agrarians are buying commodities they need to produce agricultural goods at prices set by suppliers on the basis of the real, market exchange rate, instead of the rate set by the National Bank of Ukraine. As a result, production costs grow and a substantial part of earnings is lost due to the blockade of ports and exchange rate differences," the petition said.

In addition, the National Bank raised the discount rate to 25%, which increased the rates of loans earlier taken by agrarians from commercial banks by at least another 10%, the petition said. Together with the losses incurred from exchange rate gaps, agrarians are losing more than 30% of their income to financial regulations by the National Bank, not to mention a catastrophic decline in agribusiness revenue caused by the blocking of Ukrainian seaports.

"With this in mind, the agrarian community urges the National Bank of Ukraine to assist in solving this problem of agrarians by allowing them to sell foreign currency earnings from foreign economic operations at the rate set by commercial banks of Ukraine, instead of the National Bank's rate. The agrarian sector may be wiped out of existence in the near future unless that is done," the petition said.