Ukrainian Protest Prompts Central Bank to Warn of Instability

  • Demonstrators complain about hryvnia rate, collapsed banks
  • Central bank says political instability is hurting the hryvnia

Hundreds of Ukrainians demonstrated outside parliament and the central bank over losses suffered from bankrupt lenders and foreign-exchange rates, pushing the hryvnia weaker and prompting the central bank to warn against destabilizing the economy.

Deputy central bank Governor Oleg Churiy said the central bank will intervene in the market if it needs to prop up the hryvnia, which had lost 1.8 percent against the dollar by 3:44 p.m. in Kiev on Tuesday. Some lawmakers, including ex-Prime Minister Yulia Tymoshenko, have called for the dismissal of central bank Governor Valeriya Gontareva, saying she’s responsible for the hryvnia’s devaluation and losses suffered by Ukrainian depositors.

“An increase of political tension is sparking anxiety on the foreign-currency market,” Churiy said in an e-mailed statement, adding that Ukraine’s reserves are sufficient to defend the currency. “The hryvnia’s rate crossed the mark of 26 per dollar. Further destabilization of the political situation is threatening to rock the exchange rate.”

The protests, which included demonstrators upset at high utility prices, come two years after the central bank, which took office after deadly street protests, shut down almost half of the former Soviet republic’s lenders due to insufficient capital or suspicion of money laundering. The hryvnia has fallen by more than two thirds against the dollar since the end of 2013, when anti-government demonstrations ousted a Kremlin-backed government, triggering Russia’s annexation of Crimea and its support of the separatist conflict in the country’s east that has killed more than 10,000 people.

After years of corruption and mismanagement that undermined Ukraine’s economy, policy makers stabilized the hryvnia after the International Monetary Fund approved a $17.5 billion loan to the country of more than 40 million people and the war with separatists quieted. Revenue from Ukraine’s exports, including grain, have also risen. Still, the government has struggled to meet the terms of the bailout agreement, particularly in its efforts to fight graft, delaying loan tranches. The hryvnia has lost 8.45 percent this year.

Lyudmyla Stasyuk, a 60-year-old pensioner from the city of Zhytomyr, 100 kilometers (62 miles) from Kiev, was protesting after savings she lost when the now defunct Delta Bank collapsed in 2015 were paid back only after the hryvnia’s plunge.

“I’m standing here to get proper compensation,” she said “Yes, they paid us the 200,000 hryvnia ($7,620), but 200,000 hryvnia when the exchange rate was 8 per dollar and now when it’s 28 per dollar are two different things!”

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