Why hryvnia is more expensive than rubles - the main reasons

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

People are interested in why the hryvnia is more expensive than rubles. It seems that the countries are close. Many people consider Russia to be a very advanced state economically. But what then is the reason that the hryvnia is a stronger currency? This question is rather complicated. There is no single opinion. Therefore, this article is only hypothetical, based on known historical and economic data. Let's sort them out.

The economy does not live on a single course

In general, if we analyze the experience of many countries, we can draw one important conclusion. The level of economic development is not always associated with the exchange rate. For example, take at least Belarus. Among all the countries of the post-Soviet space, it occupies almost the first place in terms of living standards. Why is this country so successful? After all, the Belarusian ruble is a very weak currency. But the standard of living in this country is high?

The fact is that Belarus is an export-oriented country. It is from the number of sold abroadgoods depends on the success of the country. If we consider Russia and Ukraine, we can draw the following conclusions. Russia mainly exports oil. And its entire economy is tied to processed products. This makes the economy dependent on oil prices. Then why are hryvnias more expensive than rubles?

As for Ukraine, a very small share of goods is exported in this country. This is what makes her vulnerable in the future. In no case can this have a positive effect on the hryvnia exchange rate, which has been constantly falling for almost 20 years (the hryvnia was introduced in 1996). At first, the rate was 1.76 hryvnia per dollar. And now - 24 hryvnia. Thus, the currency fell a little more than ten times. But why is hryvnia still more expensive than rubles?

Reasons for the value of the hryvnia

It seems that the crisis of this currency is not terrible. Despite the deplorable situation, the hryvnia continues to be a fairly strong currency. In the year after the crisis of 2014 (at the same time the ruble rose in price), prices rose disproportionately to the currency. It also means a lot. But why hryvnia is more expensive than rubles?

• Historical reason. In Russia, there were no currency reforms of such a scale and level of success as it was in Ukraine. Therefore, the hryvnia is a younger currency.
• Political reason. The authorities are doing everything possible to artificially hold the exchange rate. Consequently, the actual value of the hryvnia is significantly less than that declared by the National Bank of Ukraine. Especially if you pay attention toever-increasing external debt of this country.
• The level of citizens' confidence in this currency. It turns out that it also affects the course. Although during the crises of 2008 and 2014-15 the level of trust fell, it is still higher than that of the Russians. If the latter always called their ruble "wooden", then in the case of the hryvnia, the decline in confidence began relatively recently. And this affects which currency is in use.

That's why the hryvnia is worth more than the ruble. But it is important to note the sad trend. Still, the Ukrainian currency is depreciating much faster than the ruble. Therefore, you can always make the assumption that inflation will only increase and soon the hryvnia will depreciate even more.

Reasons for the fall of the ruble

In the case of the ruble, everything is simple. During the crisis of 2014, the following reasons for the fall of the ruble stood out:

• Sanctions. You can say as much as you want that the country does not care about sanctions. But this factor really means a lot. The world economy is increasingly experiencing the processes of globalization. Thus, if any country, no matter what it is, experiences sanctions, it is cut off and isolated from the world. And loses useful economic ties. In the case of the macrosociety, the situation is the same as with the microsociety. If some large social group is separated from the world community, it ends with the same result as the desocialization (falling out of society) of an individual person. Even in the animal kingdom, an individual without a herd or pack is doomed to death.
• Reducing the price of oil. Since Russia is one of the largest exporters of oil, its cheapening reduces state revenues. Consequently, the treasury is empty and the currency is falling.

However, the ruble is depreciating more slowly than the Ukrainian currency. This is also important to understand.

Hryvnia to ruble today

At the moment, the approximate exchange rate of the hryvnia against the ruble is 1:3. Thus, for 30 rubles you can buy ten hryvnia. However, there is a difference in product prices. Bread in Russia costs about 40 rubles per 1 kg (sometimes a little cheaper), and in Ukraine - about 20 (in given prices). Thus, prices in the neighboring state are somewhat lower than in Russia. Although it still depends on the goods. But when it comes to food products, it really is.

Conclusions

Therefore, you must understand one truth: you cannot just take and divide the price by three. For example, in Ukraine, beer costs 10-12 hryvnias per 0.5 liter. Now just multiply that number by three. What will turn out? Somewhere around 30 rubles. How much is beer in Russia? As you can see, food products are really cheaper in Ukraine. And the dollar has nothing to do with it. In general, we figured out why the Ukrainian hryvnia is more expensive than the ruble.