Ukraine Currency Forwards Signal Weakening as 2014 Yields Climb

Traders’ bets on the hryvnia weakening approached a one-year high in the forwards market on concern that Ukraine’s dwindling foreign reserves will reduce policy makers’ ability to prop up the currency.

Three-month non-deliverable forwards, showing where traders expect the currency to trade in mid-March, had the hryvnia at 8.8650 per dollar, within 0.2 percent of a 12-month low set on Dec. 5, according to data compiled by Bloomberg. The forwards traded 7.4 percent weaker than the spot rate, which depreciated 1 percent to 8.2550 per dollar by 1:55 p.m. in Kiev. The yield on the sovereign’s June 2014 dollar notes surged to a record.