Yulia Tymoshenko, Ukraine’s prime minister, has called for an investigation into President Viktor Yushchenko’s inner circle after accusing individuals of profiting from bets against the currency last week as the country struggled to avoid financial meltdown, The Financial Times reported.

The prime minister demanded the resignation of Mr Yushchenko, and named Dmytro Firtash, the billionaire and Gazprom partner in the supply of natural gas to Ukraine and Europe, as a co-conspirator in the alleged currency speculation.

“I believe the president of this country, who works according to the [principle] that whatever is worse for the country is better for me, who makes money out of the misery of people, must step down,” Ms Tymoshenko said.

The attack escalates sharply a long-running political feud between Ms Tymoshenko and Mr Yushchenko at a time when the country‘s economy is struggling.

Ms Tymoshenko claimed that a significant portion of $1.2bn (£803m, ?860m) in central bank emergency financing recently granted to Nadra, a troubled Ukrainian bank, had been used for currency speculation. The hryvnia was down as much as 12 per cent against the US dollar at one point last week.

Mr Firtash, who recently announced plans to buy Nadra, said he intended to take legal action against Ms Tymoshenko “for the groundless accusations and attacks against him personally”.

Mr Yushchenko responded by accusing Ms Tymoshenko of mishandling the economy.

This most recent spat between the one-time Orange Revolution allies could complicate crucial energy talks with Moscow, which has threatened to cut off Ukraine’s gas supplies for next year citing debt arrears.

Ms Tymoshenko has produced no evidence to back up her allegations, but called for an independent investigation by Global Witness, a London-based non-profit organisation that exposes corruption.

A Global Witness investigation published in 2006 questioned the transparency of Rosukrenergo, the Swiss-registered gas supplier co-owned by Mr Firtash and Gazprom.

Mr Yushchenko last week accused Ms Tymoshenko of mishandling energy talks with Moscow. She blames the president for interfering with plans to remove what she calls the “corrupt” middlemen from the multi-billion-dollar gas business between Ukraine, Russia and central Asia. The rivalry between Ms Tymoshenko and Mr Yushchenko has mounted as they prepare to square off for the presidency next year. Analysts say infighting could complicate Ukraine’s ability to deal with financial difficulties.

One western banker said the political paralysis was “taking an already vulnerable banking sector hostage”.

The International Monetary Fund last month issued a the first tranche of a $16.5bn standby stabilisation loan granted this autumn. Future assistance depends on implementation of conditions, including passage of a balanced budget for next year.

The Financial Times