Courtesy of Mish.
On February 3, I posted a chart of the "official" exchange rate at 16.24 hryvnias to one US dollar. In reality, the true exchange rate on the black market was on the order of 21.5 hryvnias to the dollar.
Rumor had it that Ukraine would float the currency today. That rumor was correct as was my call as to what would happen. This is what I said on February 3:
How Low Will It Go?
From 8 [a valuation just over a year ago] to 21.5 represents a 62.7% decline. And I suspect it won't stop there. Why should it?
A plunge from 8 to 30 would be a 73% decline in just over a year. And that's my initial guess barring some quick monetary rescue by the IMF.
If and when the Ukrainian National Bank does float the currency, other sites will note the "shocking overnight" plunge.
In reality, the plunge has already taken place, over time. The charts just don't show that yet.
Hryvnia One Day Price Action
Chart courtesy of Bloomberg. Click on chart for sharper image.
The decline shown today is 45.13%, but as stated above, that decline really occurred over time, as measured by the black market.
What are those intraday gyrations are all about? I strongly suspect intervention to prevent an even bigger plunge. If so, another collapse is coming up. …
