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Media: What to expect Ukraine in case of default in the U.S.

While the U.S. government decide how to avoid default, Ukrainian officials have different views on the impact of this event in Ukraine. Experts also believe that it is the instability of the euro, yen and oil suggests that the problem should be solved with the dollar one way or another.

Until August 2 the U.S. legislature, the Congress, must decide whether to raise the ultimate level of public debt. If not, then the country will be forced to announce the first in their history default, that is, inability to timely service external obligations. However, because no one has doubts about the presence of the United States all the necessary resources, the default experts call a purely "technical."

President Barack Obama urged lawmakers to find a compromise, however, and representatives of the Democratic Party in power and the opposition Republicans argue that their project is to overcome the debt crisis is the best.

Obama's chief of staff Bill Daley says that the default will not, and that Democrats and Republicans must come to a compromise, because no one wants to take responsibility for the havoc that occurs after August 2, when a decision won't taken.

However, analysts do not rule out the possibility that the U.S. president will veto if lawmakers adopt legislation proposed by the Speaker of the House of Representatives, Republican John Beyner, which envisages increasing the limit of public debt, while reducing expenditures.

The current U.S. budget deficit is 1.5 trillion dollars, and the entire national debt is 14.3 trillion dollars. Its further increase can not be changed without a decision of the Congress. However, in recent years this limit was revised to 10 times. But now the Republicans refuse to support an increase in the debt limit without reducing public spending and liberalizing taxes.

In Ukraine the everything is calm?

Restoration of the Ukrainian economy will ensure that any developments in the U.S. hryvnia rate to remain stable - said Ukrainian Prime Minister Mykola Azarov, "Today in Ukraine is absolutely stable as never before, the financial situation."

The Prime Minister also emphasized that the Government has established a strong supply of public resources, particularly gas and grains. Therefore, as says the head of the Cabinet, "hryvnia rate is and will remain undeniably stable and budget and monetary policy - a balanced and coordinated between the government and the NBU."

The National Bank shared the views of prime minister. They say that hryvnia rate will be soon remain stable and not go beyond the exchange rate band in 7,8-8 hryvnia for one dollar.

However, Deputy Prime Minister and Minister for Social Policy Tihipko believes that if the U.S. does happen the default, then it can not affect Ukraine. He also claims that Ukraine has a reaction to events in the U.S. can expect the next day due to the actual binding hryvnia to the dollar and the large share of U.S. currency in international payments.

"It is for us to be a bad situation," - said Deputy Prime Minister and explain their predictions as follows:

"The world is so globalized and so dependent on the U.S. economy, that, if not a final decision, it will lead to a devaluation of the dollar. Of course, this will affect the whole world, and certainly it will affect Ukraine. We have half of the foreign exchange reserves in dollarsin the National Bank was formed, half of foreign trade - in dollars. "

Chaos guarantees stability

Head of the Department of Foreign Economic Policy of the National Institute for Strategic Studies Irina Klimenko said that American politicians just have to agree, because the prevalence of the dollar in the world and its impact on the global economy actually means that the dollar "is not just Americans."

But even if all goes according to the worst scenario, when members of Congress fail to agree on a compromise, or if President Obama will veto the bill proposed by the Republicans, then the default will be regarded as purely technical, says Irina Klimenko.

Greater importance will be the undermining of confidence in the U.S. dollar as world currency. But here, as the expert considers, the situation will be saved by another instability:

"Simply put now nowhere in particular. With the euro is also very difficult situation. There was also the yen, but analysts are already starting to talk about the third lost decade for Japan's economy, respectively, and the currency is not so reliable. There remain perhaps that gold and oil as an alternative, but it's not as liquid assets, which is money. "

Judge of the National Institute for Strategic Studies also said that on the one hand, considering the share of dollars in the Ukrainian currency reserves, the problems with the dollar should be reflected in the Ukraine, but on the other hand, the collapse of several major U.S. banks during the crisis of 2008-2009 had measurable but not catastrophic effect on the Ukrainian currency and monetary system.

Irina Klimenko also considers that Ukrainians, who are accustomed to keep their savings in dollars or euros should try not to panic and speculation that will inevitably happen on the market in the near future. At the same time, experts say, that still instability is a major stabilizing factor for world economy:

"Right now, all currencies are shaky, their prospects - are unknown, but the general instability gives balance and understanding that the currently the collapse should not be. Overall, it is as a joke when they say that the currency you buy now, it just and will collapse soon, "- says Ms. Klimenko.

 



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