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Wednesday, February 25, 2015 12:44 PM

Ukraine Hyperinflation; Currency Plunges 44% in One Week! Actual Black Market Rates; Poroshenko Gives "Ultimatum" to Central Bank to Fix Exchange Rate

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I hear various reports of what the hryvnia actually trades for on the black market in Ukraine. I believe the reports, but they come in piecemeal.

Today, I have an actual black market link to share thanks to reader Oleg from Crimea.

In response to Ukrainian Currency Comparison: Budget Rate vs. Official Rate vs. Interbank Rate vs. Street Rate reader Oleg Writes ...

Hello Mish!

There's more to the black exchange rate than meets the eye in Ukraine.

First of all if you use the "legal" currency exchange places you can only exchange up to 3000 hryvnias per day. Then there is an extra tax on the exchange.

None of that applies at the black market of course. Often black market outfits operate from the same official currency exchange kiosks, you just need how an what to ask for.

A number of "online exchanges for people" sprang up where people say how much of what they have and what they ask for it. Of course, such sites are subject to manipulation.

I am from the Crimea originally, and I am grateful it's no longer at the top of the news.

Currency Limits

The official foreign exchange limit is 3000 hryvnias per day, down from 15,000 a year ago. That's less than $100 a day. That limit is posted in Changes in Currency Control Rules (in English).

The Exchange Tax, not in English, is up from 0.5% to 2.0%.

In a second email Oleg comments "It's a pretty widespread practice to ask around when you need to sell dollars/euros because there are tons of willing buyers at a very competitive price compared to official exchange places. Of course, going straight to the black market is risky in many respects. However, importers frequently turn to such exchanges because they need currency and cannot obtain it by official means."

Black Market

As I said previously, no one gets the "official" rate exchanging hryvnia for dollars other than corrupt banks officials taking advantage of the rigged system.

I am not sure who gets the interbank rate and in what quantities. But anyone who needs hard currency above and beyond what they can get at the interbank rate has little choice other than the black market sites that have sprung up.

Black Market Exchange Site

Please consider the appropriately named Black Market Exchange.

The site amusingly warns "Please note that the violation of the order and conditions of sale and purchase transactions of foreign currency, the perpetrators of such violations shall be liable in accordance with Art. 162 of the Code of Administrative Offenses, according to which the illegal purchase, sale, exchange, use of currency values ​​as a means of payment or collateral - entail a warning or a fine of thirty to forty-four times the income of citizens with confiscation of currency values."

The way it works is by phone. You see an exchange rate you like, make a call to the posted phone number, meet and do a deal.

The word "course" translates as "exchange rate". Some of the offers are nonsensical. Scroll down to offers that have a strike-through. Those allegedly represent completed transactions at the shown rate.

I do not believe some of the executed transactions. Others look reasonable.

Currency Converter

The Currency Converter, part of the same website, seems more reasonable.

Average Black Market Rates

Average Bank Rates

Rates Revisited

Yesterday, I noted The Dollar on the Interbank Market was Fixed at Around 33.5/USD.

Ukraine's international newspaper, The Mirror (available in English), reported on February 16, Ukrainian Government Changes Rate to UAH 21.7/USD in 2015 Budget.

The "official" rate yesterday was 28.29/USD.

I can now complete a table whose last line yesterday read like this "Street: Unknown but assuredly higher". We can now reasonably quantify "unknown".

Exchange Rates

  • 2015 Budget: 21.1
  • Official: 28.29
  • Interbank: 33.5
  • Street: 38.5

All of the above for Monday, 2015-02-24.


At the beginning of 2014, the exchange rate was 8.21 per dollar. From 8.21 to 38.5 is a decline of 78.6% in just over a year.

This morning in Emails From Kiev: Free Speech Vanishes, Total Media Thought Control; US Radar System Falls Into Rebel Hands? I quoted "Ellen" who lives in Kiev.

Ellen, who lives in Kiev writes "Today $1 is worth 36 hryvnias on the black market. A Week ago it was 20 hryvnais. No one knows where the bottom is. People buy anything just to get rid of hryvnias."

That's a decline of 44.44% in one week! And if you use the 38.5 black market rate, the weekly decline is 48%.

In my book, that is hyperinflation, complete with that attitude that does with it: "People buy anything just to get rid of hryvnias."

And where will it stop?

Full Scale War

Ukraine's deputy foreign minister announced a "Full Scale War" on Saturday.

For details, please see "Prepare for Full-Scale War" says Ukraine Deputy Foreign Minister: "With What?" asks Mish; Ukraine Lie of the Day.

Ukraine is broke. It has no means to fight a war. Nonetheless, Ukraine is dedicated to fighting the impossible to win war, with foreign currency reserves dwindling.

Insistence on more fighting will produce more of the same results. Except now the US is involved in a not-so clandestine way (See Emails From Kiev: Free Speech Vanishes, Total Media Thought Control; US Radar System Falls Into Rebel Hands?)

Poroshenko Gives "Ultimatum" to Central Bank to Fix Exchange Rate

To put the finishing touches on the hyperinflation story, at a live press conference on the currency market, Poroshenko ordered the Chairman of the National Bank and the Finance Minister to Stabilize the Hryvnia at the "Budget" Rate of 21.5 hryvnia per dollar.

During an online broadcast, Poroshenko issued an ultimatum demanding the head of the National Bank of Ukraine, Valerie Gontareva, stabilize the hryvnia at a level which was guided by Cabinet in approving changes to the 2015 budget.

Poroshenko is not only a military fool, this rate change by mandate while fighting a stupid war proves he is an economic fool as well. Of course Mish readers knew that long ago.

I advise Hontaryevoyi to get out of Ukraine while she still can.

Addendum - Street Rates in Lviv

Reader John, who speaks Ukrainian, and whose father payed a key role in the Ukrainian resistance in WWII, has a sister who lives in Lviv, a beautiful town in Western Ukraine. He got "street" rates from his sister, just moments after I posted the above.

John writes ...
Hello Mish

My sister just returned from grocery shopping and advised that prices have further skyrocketed and are getting outrageous. The population will be subsisting on potatoes and beets and not much more.

Street Rates

  • SELL 1 USD = 25.00 UAH
  • SELL 1 EURO = 28.00 UAH
  • BUY  1 USD = 39.00 UAH
  • BUY  1 EURO = 45.00 UAH
Ukraine faces an IMF funding decision on March 11. Clearly it's not going well. I knew that was the purpose of the ultimatum. John provided the date.

Black market street rate in Lviv is now 39-to-1 if you want to buy dollars.

Addendum Two - Translations

In my previous post, I requested a better translation of "Накануне супруга журналиста сообщила, что он задержан СБУ по подозрению в госизмене".

The Google translation was "suspicion of SBU gosizmene".

Many readers confirmed my translation assumption that gosizmene meant treason.

Reader Andrei offers this translation and explanation  "Yesterday the journalist's wife informed that Ukraniane Secret Services detained her husband on suspicion of treason".

Andrei explains "gosizmena" is a shorter version of "gosudarstvennaya izmena" which means "treason against the government"

Reader "Silver" commented: "Try Yandex for translations. It tends to be much more accurate than Google or Bing."

I tried it.  Here is the Yandex Translation: "On the eve of the wife of the journalist reported, he SBU detained on suspicion of treason."

That's quite broken, yet understandable. Yandex did get the word treason correct. Google translated it as the non-word "gosizmene".

This is what I go through every day, in many languages. I am getting better at guessing words. Many have volunteered to help, but my hours are not normal to say the least. I frequently write at 3:00AM.

Thanks to all who responded.

Mike "Mish" Shedlock

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