Ukraine's Costly Addiction to the Dollar

What European country has more U.S. dollars in circulation than it does its own currency? What capitalist democracy is home to a thriving black market in foreign exchange? Unlikely as either may seem, there is an answer: Ukraine.

Ukraine's affair with the dollar stretches back at least 21 years. Ukrainians learned to covet the U.S. currency during the hyperinflation of the early 1990s, and never quite kicked the habit to the extent that their neighbors in Russia did. The supply of the national currency, the hryvnia, is equivalent to $25 billion today, while about $80 billion in U.S. cash circulates in the Ukrainian economy, according to economist Alexander Okhrimenko.