Proving me wrong - Government intervenes in currency

Yesterday I wrote this stating that it was “interesting” Ukraine was attempting to force transparency in the extraction industries - a place from where the oligarchy wealth comes, amongst others.

It is interesting because it attempts to force some transparency into what and how much is extracted, and thus will give indications of what is sold in comparison to what has supposedly been extracted.  The difference between the two is therefore what lays on the inventory and would in theory be there to physically see.

Let us be quite honest, a lot of what is extracted can quite easily be, and is, sold internally or exported under the radar of tax, customs revenue and ultimately the struggling State budget is the loser.

Be it coal, coke, ore, oil, gas etc, the majority that leaves Ukraine, officially or nefariously, is bought and sold in US$.

Considering this “extractive transparency”, it becomes especially interesting that the government seems quite determined to prove my long standing prediction of an exchange rate of UAH 9 to US$1 by the year end wrong, (and UAH 10 or 11 to US$1 by mid 2013 as well, by extension), and to do so they are seeking to force exporters -many of whom are the same people that are the extractors now required to be more transparent - to convert part of their foreign currency earnings into Hryvnia.

Those forcibly converted US$s then being used to intervene in the market and keep the Hryvnia from depreciating - at least temporarily - and thus delaying my prediction.

Just how long the peg to the US$ can be maintained by doing this remains to be seen.