Ukraine Currency Crashes To Record Low; Abandons Dollar Peg

Ukraine Currency Crashes To Record Low; Abandons Dollar Peg (ZeroHedge, Feb 26, 2014):

Following yesterday’s admission by the new head of Ukraine’s central bank of the considerable bank runs in recent days and the rapid dwindling of central bank reserves, Sergiy Kruglik – the director of international affairs for the bank – announced this morning that Ukraine has adandoned the dollar peg and will adopt a flexible exchange rate. The Hyrvnia collapsed through 10.00 on the news and is now trading 10.40 at record lows against the USD.

20140226_UAH

As The Economist notes, on February 7th the National Bank of Ukraine (NBU, the central bank) finally devalued the official rate of the hryvnya, to HRN8.7:US$1.

The policy was then to set the peg to the dollar roughly in line with trading on the interbank exchange. At the same time, the authorities introduced more foreign-exchange controls.

This has now changed and the currency is in free-fall. One cannot but think this is a desperate attempt to force the hands of a bailer-out to move before total chaos ensues (and of course, as the UAH plummets so import costs of energy will soar).

Charts: Bloomberg

3 thoughts on “Ukraine Currency Crashes To Record Low; Abandons Dollar Peg

  1. The power of the dollar is falling.
    The US had better wake up. The world has moved away due to their roughshod policies.

  2. They had no option if they can’t pay their bills. The US & EU can’t even help because their currencies are worthless there, especially as they’ve severed the peg.
    Fortunately, the older folk will feel happier with their old friend the ruble, like putting on an old coat!

  3. Reply to Squodgy: If the truth be told, all nations are living on credit, except middle eastern countries…….none of them have the money.
    Reminds me of what M. Eckles said when asked what caused the crash of 1929…..he was FDR’s FED chairman…..”As in a poker game when the chips get concentrated into fewer and fewer hands, the other fellows can only stay in the game by borrowing. When their credit ran out, the game stopped.”
    It still fits today.

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