Introduction
The hryvnia, sometimes hryvnya or grivna (Ukrainian: “гривня”, abbr.: “грн); code: (UAH), has been the national currency of Ukraine since September 2, 1996. The hryvnia is subdivided into 100 kopiyok.
The modern Ukrainian hryvnia is sometimes transliterated as hryvna, hrivna, gryvna or grivna, due to its Russian language counterpart, гри́вна, pronounced [grívna]. However, the standard English name for the currency is hryvnia[1].
Now the situation of hryvnia is changing very often. She hangs over inflation or devaluation. It can be impaired. Its course varies, as well as the rate of foreign currencies. That is why this is an actual topic.
The aim of this paper are to study new tendencies of the rate of the hryvnia and to widen the knowledge of the history of hryvnia.
The objectives of this paper are:
1) to be aware of the history of hryvnia;
2) to deeply learn the prospects of the Ukrainian hryvnia;
3) to study new tendencies of the development of hryvnia in Ukraine.
The main method of choosing information is descriptive.
The practical application of this paper is to use the results of the paper in the future research work.
This work consists of introduction, the first part “The history of Ukrainian national currency – hryvnia”, the second part “Prospects of the Ukrainian hryvnia”, the third part “The current situation of hryvnia”, summary and references.
I. The history of Ukrainian national currency – hryvnia
1.1 History of Hryvnia
In various historical periods the word "hryvnia" meant a copper coin of two and a half kopiyka denomination, later - three kopiykas, and at last, a silver coin of ten kopyika denomination was called "hryvenyk" (as it is known this tradition had been maintained during the Soviet period).
Parallel with the name "hryvenyk", the name "zloty", borrowed from the Polish language was used. Later, a silver coin of fifteen kopyika denomination was called so as well.
Proclaiming the establishment of the Ukrainian People's Republic on June 18, 1917, the Central Rada introduced new national currency. Initially the Ukrainian karbovanets was chosen as such currency. Its value equaled 17,424 shares of pure gold (1 share =0,044 g of gold). The first banknote of the Ukrainian People's Republic of 100 karbovanets denomination was issued by the Decree of the Central Rada on December 19, 1917. Heorhii I.Narbut, an outstanding Ukrainian graphic artist designed this banknote.
When designing this banknote Narbut used exquisite ornaments of the Ukrainian baroque of the 16-18-th centuries, decorative fonts, Trident depiction (the Grand Duke Volodymyr the Great's family emblem) and the oldest coat of arms of Kyiv city council of the 16-18-th centuries. "100 Karbovanets" inscription was printed on the banknote in the languages of four most numerous nations, inhabiting Ukraine: in Ukrainian, Russian, Polish and Jewish (Hebrew).
The choice of the Trident as the state emblem of Ukraine is connected with the issue of Narbut's banknote with the face value of 100 karbovanets. Designing the lay-out of the 100-karbovanets banknote, Heorhii Narbut paid attention to the trident symbol, characteristic for the most ancient Ukrainian money- zlatnyks (gold coins) and sriblianyks (silver coins) of the Grand Duke Volodymyr the Great and he used this symbol in the banknote lay-out. This original symbol stuck immediately to the memory of Ukrainian patriots. The Trident was interpreted as an allegory of Ukrainian statehood since the Grand Duke Volodymyr the Great's period, which was of deep patriotic meaning. Immediately after putting the banknote into circulation, cases of its forgery were recorded . Taking that into consideration and due to some political reasons, the Law on introduction of the new monetary unit, Hryvnia, equal to 100 shahs and equivalent to 1,2 karbovanets was adopted by the Central Rada on March 1, 1918.
In 1918 the banknotes of 2, 10, 100,500 1000 and 2000 Hryvnia denominations were put into circulation in Berlin (design of the latest two banknotes was done after proclamation of Pavlo Skoropadskyi's hetman state). Design of the first banknote, decorated with a rather simple geometrical ornament, was elaborated by Vasyl Krychevskyi, of the next three - by Heorhii Narbut.
Narbut's Hryvnia banknotes as well as the previous one were remarkable for their refined decoration. So, Narbut used ornaments of Ukrainian book engravings of the 17-th century on the 10-Hryvnia banknote; depiction of a worker with a hammer and a peasant woman with a sickle against a background of a wreath of flowers and fruits- on the 100-hryvnia banknote; and his favourite alegory "Young Ukraine" like an irradiated girl's head with a wreath (due to this detail the banknote was humorously called "Horpynka" - a widespread woman's name).
The Hetman Pavlo Skoropadskyi, who came to power in April 1918, resumed again the karbovanets as the basic monetary unit of the Ukrainian state. Design of banknotes of 10, 25, 100 and 1000 karbovanets denomination was performed. Heorhii Narbut was the author of the draft of only one banknote of 100 karbovanets denomination , in which he used a portrait of Bohdan Khmelnytskyi, industrial themes (composition of craftsman's tools) and a draft of the state emblem of Ukraine with a combination of symbols :"The Trident - Ukrainian Cossack with a musket". The drafts of the other banknotes were not of high artistic value and were done by I.Zolotov, I.Mozalevskyi, A.Bogomazov and other pencil artists).
Chronology of putting banknotes of the UPR and the Ukrainian State into circulation was as follows: January 5, 1918 - the banknote of denomination 100 karbovanets (H.Narbut's design); April 6, 1918 - 25 and 50 karbovanets denomination banknotes nicknamed "lopatky"- shovels (O.Krasovskyi's design); October 1918 - the banknotes of 10, 100 and 500 Hryvnia denominations ("Horpynky", H.Narbut's design); October 1918 - the banknotes of 1000 and 2000 Hryvnia denominations (I.Mozolevskyi's design); August 1919 - 10 (nicknamed "raky"-crawfish) and 1000 karbovanets (I.Zolotov's design), 100 karbovanets (H.Narbut's design) and 250 karbovanets (nicknamed "kanareiky"-canaries, B.Romanovskiy's design); October 1919 - 25 karbovanets (A.Prychodko's design).
After the transfer of power in Ukraine to the Directory under leadership of Volodymyr Vynnychenko and Symon Petliura in December 1918, Hryvnia again was declared as the basic monetary unit of the restored Ukrainian People's Republic.
Bolshevik money (nicknamed disdainfully "tysiachky" - cheap thousands), introduced by Sovjet authorities in the Soviet Ukraine were exchanged at a very low exchange rate (1 gold karbovanets = 5457000000 Soviet karbovanets). This forced implementation of monetary reform and putting a Soviet chervonets (1,6767 g of gold) into circulation in 1922-1924. In 1924 the exchange rate of the new soviet karbovanets against the chervonets was set equal to 1:10. This event signified the final introduction of the soviet currency.
The proclamation of Ukrainian independency opened way to introduction of the full-value national currency in our young state. Hryvnia might have become such currency according to traditions of both Kyiv Rus and the period of liberation wars of 1917-1920. As to the name of the change coin, the name of "sotyi" (one hundredth), "rezana" (name of an ancient monetary unit equal to a part of the ancient hryvnia) was suggested, but the preference was given to the customary "kopiyka". The first specimen of Ukrainian national currency was manufactured in Canada in 1992 (V.Lopata's design). However the ukrainian karbovanets was put into circulation in Ukraine in 1992 as the provisional currency. This very monetary unit became the victim of inflation, caused by the economic crises of the transitional period.
Strengthening of stabilization processes in economy in 1995, the first half of 1996, in particular significant holding up of production decrease , exchange rate stabilization of the Ukrainian karbovanets against foreign currencies, increase of population earnings created requisite conditions for inroduction of Hryvnia, now - the monetary unit of our state in accordance with the Constitution of Ukraine.
The Ukrainian President's Decree "On the Monetary Reform in Ukraine" was declared on August 25, 1996.
The monetary reform in our state was carried out on September 2 -16 in acordance with the President's Decree.
Karbovanets deposits of households were converted into Hryvnia deposits according to the exchange rate of 100000 karbovanets against 1 Hryvnia without any restrictions and confiscations.
Both Hryvnias and karbovanets were used in cash circulation for 15 days: September 2-16, 1996, with a gradual withdrawal of the latter. The use of karbovanets for all kind of payments was stopped after September 1996 and Hryvnia became the only legal tender of payment within Ukraine.
From the moment of launching the reform cash payments from the banks vaults (incl. salaries, pensions, etc), as well as all non-cash settlements were executed only in the new domestic currency.
The monetary reform in Ukraine was an event of great importance, as a result of which the domestic currency, one of the integral parts of statehood, was introduced. Foreign analysts greeted the implementation of monetary reform in our state, considering the introduction of the Ukrainian currency-Hryvnia, as the starting point for stabilization of the Ukrainian economy [2].
The hryvnia was introduced during the period when Victor Yushchenko was the Chairman of National Bank of Ukraine. However, the first banknotes issued bore the signature of the previous National Bank Chairman, Vadym Hetman, who had resigned back in 1993. This was so because the first notes had been printed as early as 1992 by the Canadian Bank Note Company, but it had been decided to delay their circulation until the hyperinflation in Ukraine was brought under control.
Initially, the foreign exchange rate was UAH 1.76 = USD 1.00. Following the Asian financial crisis in 1998 the currency devaluated to UAH 5.6 = USD 1.00 in February 2000. Later, the exchange rate remained relatively stable at around 5.4 hryvnias for 1 US dollar and was fixed to 5.05 hryvnias for 1 US dollar from 21 April 2005 until 21 May 2008. In mid-October 2008 rapid devaluation began with the hryvnia dropping 38.4 % from UAH 4.85 for USD 1 on 23 September 2008 to UAH 7.88 for USD 1 on 19 December 2008.[3] After a period of instability, a new peg of 8 hryvnias per US dollar was established, and remains to the current day [1].