News / Economy

    Ukraine's Currency Pays Price for Confrontation

    A display shows currency exchange rates in central Kyiv, Feb. 4, 2014.
    A display shows currency exchange rates in central Kyiv, Feb. 4, 2014.
    Reuters
    Ukraine's acting prime minister blamed confrontation on the streets for a 10 percent slide in the currency since November that drove the hryvnia below nine to the dollar on Wednesday for the first time in five years.
     
    For many analysts, it suggested the central bank would no longer prop up the currency amid a fight over Ukraine's future.
     
    Torn between the European Union and Moscow since President Viktor Yanukovich spurned an EU trade deal in favor of Russian aid, Ukraine's leader was offered more carrots and sticks from east and west as he debated who may replace the pro-Russian premier he removed last week in a bid to appease his critics.
     
    EU diplomacy chief Catherine Ashton, meeting Yanukovich and opposition leaders separately in Kyiv, urged them to hasten attempts to resolve a sometimes violent standoff and promised European economic and technical help to help with reforms.
     
    Riot police officers take position outside Kyiv's Independence Square, the epicenter of the country's current unrest, Ukraine, Feb. 1, 2014.Riot police officers take position outside Kyiv's Independence Square, the epicenter of the country's current unrest, Ukraine, Feb. 1, 2014.
    x
    Riot police officers take position outside Kyiv's Independence Square, the epicenter of the country's current unrest, Ukraine, Feb. 1, 2014.
    Riot police officers take position outside Kyiv's Independence Square, the epicenter of the country's current unrest, Ukraine, Feb. 1, 2014.
    The European Parliament, where lawmakers criticized the Ukrainian authorities for violence toward protesters and dozens of arrests, prepared to call on Thursday for sanctions - a call EU states are unlikely to heed at this stage in the hope that Yanukovich will choose to appoint a consensus government.
     
    The U.S. ambassador to Ukraine, speaking ahead of a visit this week by a senior State Department official, also warned that U.S. economic sanctions would follow swiftly if Yanukovich tried to clear central Kyiv's Maidan protest camp by force.
     
    In Moscow, President Vladimir Putin's spokesman assured Ukraine that Russia would not review its terms for vital gas supplies - as long as Kyiv put right a growing pile of unpaid bills that was causing “concern” in the Kremlin.
     
    It was a reminder, if one were needed, of how far Ukraine depends on Russian goodwill since Yanukovich agreed to take a $15-billion package of loans and cheaper gas. Russia froze payouts last week when Prime Minister Mykola Azarov stepped down and is waiting to see the color of the new government.
     
    Yanukovich is expected to meet Putin at the opening of the Winter Olympics in Sochi on Friday - giving the Russian leader an opportunity for a private update on who will get the job.
     
    A parliamentary ally of Yanukovich, whose power base lies among the industrial magnates of Ukraine's Russian-speaking eastern regions, said on Wednesday that the president might say next week who will take over as prime minister.
     
    Currency Slide
     
    Serhiy Arbuzov, the deputy premier currently heading the government on an interim basis, insisted the Ukrainian economy was in good shape and blamed politics for the weaker currency.
     
    “Political instability is putting pressure on the currency market. There is tension despite a lack of economic reasons for this,” he told the cabinet in televised remarks.
     
    “Every day of confrontation and a lack of desire to find a compromise weakens our country economically.”
     
    In support of his argument that there was no economic cause for concern, he cited new data showing the balance of payments moved into a surplus of $2 billion by the end of last year.
     
    The data indicate, however, that this was due to Russia buying $3 billion of eurobonds in December, as agreed with Putin. The broader current account deficit grew by 13 percent last year to $16.141 billion.
     
    The central bank used reserves to try to maintain a stable peg for the hryvnia against the dollar and did so again on Wednesday, offering to auction dollars at 8.7 hryvnias. But on the interbank market, the rate fell 3 percent to below 9 - 10 percent weaker than before the EU deal collapsed in November.
     
    Many analysts suggested the central bank was now giving up its efforts to hold the rate and that a drop to 10 per dollar or less could benefit the economy by making Ukraine's exports more competitive.
     
    The indicative daily fixing rate, according to Thomson Reuters data, was 9.0850 hryvnias per dollar compared to Tuesday's 8.8025. The last time it fell below 9 per dollar was in February 2009, during a volatile period in the early months of the international financial crisis.
     
    Bank of American Merrill Lynch analysts said the central bank seemed to have “abandoned” its peg. They forecast a rate of 10 hryvnias per dollar for this year, and hence a reduction in the current account deficit “to a more sustainable 3 percent of GDP”.
     
    Tug-of-War
     
    The European Union and United States have stressed they do want to partake in a “bidding war” with Russia for Ukraine, a huge territory of 46 million which Putin wants to join a customs union with other former Soviet republics. But both Brussels and Washington are urging closer relations on Kyiv.
     
    Ashton said she believed a “Ukrainian-led process” of compromise and reform was possible to overcome the deadlock that has raised fears of instability spreading.
     
    But, suggesting frustration at the lack of real compromise between the authorities and the opposition, she added: “What I really need to feel is a growing sense of momentum on this. I think that that is where we need to see more work.”
     
    She played any suggestion there were “large dollops of money” on offer from the EU, but stressed broader cooperation.
     
    U.S. Ambassador Geoffrey Pyatt told a Kyiv television channel that Washington welcomed Yanukovich's repeal last week of “black laws” aimed at curbing demonstrations and his dismissal of Azarov's government.
     
    “We hope,” he added, ”That he will now take additional steps to rebuild consensus ... and build a broad technical government that can focus on returning Ukraine to political and economic health.”

    You May Like

    Hope Remains for Rio Olympic Games, Despite Woes

    Facing a host of problems, Rio prepares for holding the games but experts say some risks, like Zika, may not be as grave as initially thought

    IS Use of Social Media to Recruit, Radicalize Still a Top Threat to US

    Despite military gains against IS in Iraq and Syria, their internet propaganda still commands an audience; US officials see 'the most complex challenge that the federal government and industry face'

    ‘Time Is Now’ to Save Africa’s Animals From Poachers, Activist Says

    During Zimbabwe visit, African Wildlife Foundation President Kaddu Sebunya says poaching hurts Africa as slave trade once did

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Ivorian Chocolate Makers Promote Locally-made Chocolatei
    X
    July 29, 2016 4:02 PM
    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100 percent Ivorian chocolate bar at a time.
    Video

    Video Ivorian Chocolate Makers Promote Locally-made Chocolate

    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100 percent Ivorian chocolate bar at a time.
    Video

    Video Tesla Opens Battery-Producing Gigafactory

    Two years after starting to produce electric cars, U.S. car maker Tesla Motors has opened the first part of its huge battery manufacturing plant, which will eventually cover more than a square kilometer. Situated close to Reno, Nevada, the so-called Gigafactory will eventually produce more lithium-ion batteries than were made worldwide in 2013. VOA's George Putic reports.
    Video

    Video Polio-affected Afghan Student Fulfilling Her Dreams in America

    Afghanistan is one of only two countries in the world where children still get infected by polio. The other is Pakistan. Mahbooba Akhtarzada who is from Afghanistan, was disabled by polio, but has managed to overcome the obstacles caused by this crippling disease. VOA's Zheela Nasari caught up with Akhtarzada and brings us this report narrated by Bronwyn Benito.
    Video

    Video Hillary Clinton Promises to Build a 'Better Tomorrow'

    Democratic presidential candidate Hillary Clinton urged voters Thursday not to give in to the politics of fear. She vowed to unite the country and move it forward if elected in November. Clinton formally accepted the Democratic Party's nomination at its national convention in Philadelphia. VOA national correspondent Jim Malone has more.
    Video

    Video Trump Tones Down Praise for Russia

    Republican presidential candidate Donald Trump is toning down his compliments for Russia and Vladimir Putin as such rhetoric got him in trouble recently. After calling on Russia to find 30.000 missing emails from rival Hillary Clinton, Trump told reporters he doesn't know Putin and never called him a great leader, just one who's better than President Barack Obama. Putin has welcomed Trump's overtures, but, as Zlatica Hoke reports, ordinary Russians say they are not putting much faith in Trump.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8998
    JPY
    USD
    103.32
    GBP
    USD
    0.7594
    CAD
    USD
    1.3176
    INR
    USD
    66.954

    Rates may not be current.