The hryvnia headed for a fifth weekly decline and Ukraine’s Eurobonds were set for the biggest loss in two months as a dispute with Russia on gas shipments heightened tensions provoked by unrest in the country’s east.
The currency fell to a record low of 13.61 per dollar and traded at 12.6775 by 2:50 p.m. in Kiev. The hryvnia is down 8.5 percent this week and 35 percent in 2014, the worst performance worldwide. The yield on dollar bonds maturing in 2023 rose five basis points to 9.47 percent, extending a five-day jump to 79 basis points, the most since the period through Jan. 24.
Russian President Vladimir Putin, who annexed Crimea and deployed thousands of troops along the Ukrainian border, threatened yesterday to halt gas shipments to the country. The crisis is dominating the agenda for finance chiefs gathering for the spring meetings of the International Monetary Fund and World Bank, which start in Washington today.
“There is endless pressure on the hryvnia,” Lutz Karpowitz, a Frankfurt-based strategist at Commerzbank AG, wrote in an e-mailed report today. “The reasons behind the development are once again the tensions with Russia, not just the fragile geo-political situation but also the question of gas imports.”
Ukraine’s acting Prime Minister Arseniy Yatsenyuk wants to give greater powers to the regions and resolve the crisis gripping the country, he told reporters today in the city of Donetsk, where pro-Russian protesters have seized the local government headquarters.
The IMF is looking to provide Ukraine with between $14 billion and $18 billion of financial aid. Managing Director Christine Lagarde told Bloomberg Television’s Tom Keene yesterday she has “overwhelming support” from her membership for the steps the lender is taking.
Ukraine will probably receive $7 billion in IMF financing this year, Finance Minister Oleksandr Shlapak said.
The country is also seeking further funding from Group of Seven countries, Shlapak said an interview in Washington yesterday. Of the group’s members, Canada has pledged $200 million and the U.S. has also responded, he said.
“Ukraine totally depends on international support,” Commerzbank’s arpowitz wrote. “The fact that the hryvnia continues to ease, even though the EU and the IMF have already announced far-reaching support measures, illustrates that the end of the line has not yet been reached.”
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