February 2020
Investment banker Igor Mazepa, the CEO of Concorde Capital, discusses both the benefits and disadvantages of the strong hryvnia
Investment banker Igor Mazepa, the founder and CEO of Concorde Capital, commented for The Page media resource on the hryvnia’s strengthening.
The hryvnia’s strengthening in recent months has been driven by nonresident demand for local government bonds – says Igor Mazepa. In general, nonresidents are financial speculators, not systemic, strategic investors. Therefore, this situation risks becoming a bubble for the Ukrainian economy both in the short- and long-term, said Igor Mazepa, the founder and CEO of Concorde Capital investment company.
Other than the unusual risk, the strengthening hryvnia hurts exporters, above all, as well as domestic producers, who are forced to curtail production as a result. A strong example is my own investment. My partner and I built a factory to produce corrugated cardboard and planned to launch it in 2019. We initially proceeded from the exchange rate being at UAH 28/USD. Under that condition, no one would have imported cardboard to Ukraine since it would have been more expensive to sell than what’s produced in Ukraine – says Igor Mazepa.
Now the exchange rate is at UAH 24/USD. That is, the hryvnia – and the domestic price in the USD equivalent, accordingly – have appreciated 15%. For our competitors in Poland and Hungary, the Ukrainian market became more attractive and they have already begun to export their products here. As a result, we haven’t launched the factory yet. It is sitting idle. And the Khmelnytska region didn’t gain 300 jobs as a result – summarizes Igor Mazepa.
Video comments of Igor Mazepa on the strengthening hryvnia
These were the comments of investment banker Igor Mazepa, the founder and CEO of Concorde Capital, on the benefits and disadvantages of the strengthening hryvnia.
