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5 Feb 2015
Ukrainian Central Bank Hikes Rates
FXStreet (Mumbai) - Ukraine's National Bank markedly boosted interest rates and scrapped foreign currency auctions today, but warned that the risks of higher inflation and further decline in the value of the hryvnia remain high.
In its latest effort to avert financial collapse, the Ukraine's central bank on Thursday announced a sharp hike in interest rates and scrapped foreign currency auctions amid a lack of foreign funding.
The bank boosted the key refinancing rate to 19.5%, a massive leap from the previous 14%.
Central Bank Governor Valeria Gontareva noted at a news conference,” There is still panic on the market, connected with ongoing fighting,"
With the nation's hryvnia continuing in a spectacular freefall and foreign exchange reserves running at a mere USD7.5 billion last year - barely enough to cover five weeks of imports - the bank has few ways to bring health to an economy collapsing on the brink of bankruptcy.
In its latest effort to avert financial collapse, the Ukraine's central bank on Thursday announced a sharp hike in interest rates and scrapped foreign currency auctions amid a lack of foreign funding.
The bank boosted the key refinancing rate to 19.5%, a massive leap from the previous 14%.
Central Bank Governor Valeria Gontareva noted at a news conference,” There is still panic on the market, connected with ongoing fighting,"
With the nation's hryvnia continuing in a spectacular freefall and foreign exchange reserves running at a mere USD7.5 billion last year - barely enough to cover five weeks of imports - the bank has few ways to bring health to an economy collapsing on the brink of bankruptcy.