UPDATE 1-Ukraine’s central bank moves to support hryvnia after hiatus
(Adds details)
KYIV Feb 4 (Reuters) – Ukraine’s central bank offered on
Tuesday to sell dollars on the interbank market after two days
of inactivity, moving to try to stem strong demand for dollars
prompted by widespread unrest in the country.
The bank defended the hryvnia staunchly last year,
clinging to the currency’s crawling peg even before Ukraine
secured a $15 billion loan agreement with Russia which pulled
the country from the brink of default in December.
But it appears to have eased its tight grip over the
currency since mid-January, allowing it to tumble as much as 2.5
percent against the dollar last Friday – the currency’s biggest
one-day fall since October 2009.
The bank offered dollars at 8.60 hryvnias on Tuesday,
according to Reuters data, compared to 8.40 on Jan. 30. The
hryvnia was quoted at 8.75 per dollar, having closed at 8.65 on
Monday.
Analysts link the currency’s slide to uncertainty over the
Russian aid package and mass anti-government protest which have
swept Ukraine since Kyiv walked away from a trade agreement with
Europe in November last year.
Prior to Moscow’s bailout, the cost of maintaining the peg
had contributed to halving central bank reserves from highs of
around $40 billion reached in 2011.
Ukraine’s dollar bonds rallied sharply on Monday on
speculation that the country, racked by mass anti-government
protests, might get financial support from Western powers.
However, EU officials later played down weekend comments
from EU foreign policy chief Catherine Ashton that Europe and
the United States were working to offer funds to help Ukraine
enact reforms to stabilise its political system.
Following a series of concessions to opposition leaders from
embattled president Viktor Yanukovich in January, the Ukrainian
parliament was in session on Tuesday to discuss possible reforms
to the 2004 constitution.
(Writing by Pavel Polityuk and Jack Stubbs; Editing by Janet
Lawrence, John Stonestreet)