Reduction of discount rate by National Bank in 2013 dangerous for economy - Naiman
2014-02-03 11:50:36
The National Bank of Ukraine should raise a discount rate this year, despite the regulator's wish to improve the conditions of crediting and cut the refinancing rate from the existing 6.5%.
Managing partner of the investment company Capital Times Eric Naiman writes in his blog
"The NBU insists that in the current year it will concentrate its efforts on improvement of credit conditions and for this it may reduce a discount rate from the current 6.5%. However, in my opinion, an unavoidable increase of the NBU discount rate is ahead. And the earlier it is done, the better it will be for Ukraine," the expert says.
According to him, the countries with large deficit of the balance of payments and the budget have to protect the financial system by raising interest rates, he cites Turkey, India and the RSA as an example. "Trying to go against this trend may be very, very expensive," Naiman says.
To remind, leaders of the Turkish central bank took a decision to rise a discount rate from 5.5% to 10% in early January this year in order to rise the Turkish lira rate to the dollar, which devaluated by 15% in January.
Meanwhile, as foreign media write, a situation in which Turkey got is far from unique. The currencies of developing countries grow cheaper at different rates since last summer, when a prospect became real of tighter U.S. monetary policy and reduction of an inflow of ultra-cheap liquidity into the global financial system.