Ukraine’s currency continues nose dive – Tribune
MOSCOW — Ukraine’s currency touched record lows Monday as continued violence in the rebel-held east fueled pessimism about the country’s economic future.
The slump occurred as the Ukrainian military said it will not pull back its heavy arms from the front lines until attacks by pro-Russian rebels cease. Rebel leaders said they have agreed to begin a fuller withdrawal starting Tuesday.
A pullback of heavy weaponry is a key step in a cease-fire deal reached this month, but both sides have said that fighting is continuing, casting doubt on efforts to quell the 10-month-old conflict.
Fighting between the separatists and Ukraine’s Western-allied government has claimed more than 5,600 lives, according to U.N. estimates. It is the worst bloodshed in Europe since the Balkan wars of the 1990s.
Amid the violence, the Ukrainian currency, the hryvnia, fell 10 percent against the U.S. dollar on Monday before recovering its losses — another sign of the nation’s flat-lining economy. The combination of military setbacks and fiscal woes is increasingly threatening the government of President Petro Poroshenko.
Ukraine’s currency has dropped 42 percent this month and is down 69 percent in the year since then-President Viktor Yanukovych fled office after months of pro-European street protests.
The Ukrainian central bank on Monday announced new measures to stem the losses, imposing limits on Ukrainian businesses’ ability to purchase foreign currency.
“We hope that we will be able to stabilize the situation using these measures,� Valeriya Gontareva, governor of the National Bank of Ukraine, said in Kyiv on Monday, according to the UNIAN news agency.
The currency’s nose dive puts even more pressure on government finances, making it harder for the country to buy energy, military hardware and the basics necessary for a war-hit population. It sends prices of imported goods skyrocketing.
The plunge calls into question Ukraine’s ability to repay money borrowed from global creditors. The central bank’s reserves of foreign currency are scraping bottom, raising the prospect that the nation could soon go bankrupt.
Ukrainian military officials said that the ongoing violence meant that they could not pull back their weaponry.