KIEV, Dec. 2 – The National Bank of Ukraine on Tuesday desperately tried to determine the real market value of the hryvnia on the cash market, but again refused to spend its forex reserves to support the currency.

The hryvnia’s value dropped to 7.28 hryvnias to the U.S. dollar Tuesday compared with 7.14/dollar on Monday, according to the NBU’s official exchange rate. The bank defines the official exchange rate as an average rate used in daily currency transactions between commercial banks.

The decline comes a day after a warning from President Viktor Yushchenko that the hryvnia’s further slide may force the president to shake up the top management of the NBU.

The hryvnia has been facing downward pressure since early October, but the pressure had accelerated dramatically over the past eight days due to major panic on the currency market.

“The president is concerned with the panic mood that has taken place on the interbank currency market over the past seven to eight days,” a statement from the office of Yushchenko said Tuesday.

“In this case there was a psychological factor,” the statement quoted Yushchenko as saying. “The major part of the demand is speculative.”

Yushchenko, who sees the exchange rate of 6.0 hryvnias to the dollar as “comfortable” through the end of 2008, said Monday the hryvnia’s latest plunge makes the national currency “deeply undervalued.”

Yushchenko on Monday suggested the NBU must take action, perhaps a currency intervention, that would hurt financial speculators betting on the hryvnia’s further devaluation. The hryvnia so far lost about 50% of its value against the dollar over the past two months.

The NBU on Tuesday scrambled to remove last remaining restrictions to market quotation of the hryvnia on the cash market in a bid to let commercial banks find equilibrium as the hryvnia’s exchange rate against the dollar fell.

The NBU allowed commercial bank to quote exchange rates that they find adequate, cancelling regulation that has been restricting the banks from deviating by more than 1.5% from the official rate.

The restriction led to the fact that many banks would obey by quoting the proper exchange rates, but in fact the banks would simply not sell dollars at all. This made it virtually impossible to buy hard currency.

The removal of the restriction on Tuesday led to the hryvnia’s further decline on the cash market as banks agreed to buy dollars at an average of 7.12/dollar and selling at 7.34/dollar, according to currency dealers.

The move was praised analysts as a step in helping to find the real market value of the hryvnia.

“This is good for the market,” one currency dealer said. “The money is a commodity that must cost as much as it is worth at a certain time.” (tl/ez)