The Ukrainian currency plunged against the dollar Thursday as people raced to exchange booths to convert their savings into U.S currency, AP reported.
The national currency, the hryvna, plummeted to 6.01 hryvna per U.S dollar in trading at Ukraine`s currency exchange, amid a run on banks and soaring demand for foreign exchange. The exchanged closed at 5.8 hryvna per dollar on Wednesday, and the currency was at 5.6 to the dollar as recently as Oct. 8.
Nervous customers lined up to buy the currency at exchange offices across the capital Thursday, some of which ran out of cash. The country was already short on foreign currency, as demand for steel, its main export commodity plunged. The Ukrainian currency has lost some 20 percent since September.
Panicky Ukrainians withdrew as much as $2.7 billion from their bank deposits since the beginning of the month to convert their money into dollars and euros, National Bank head Volodymyr Stelmakh told the newspaper Kommerstant.
The run on banks was prompted by the global credit crunch, troubles at the country`s sixth-largest bank and the fall of the hryvna. Ukrainians` memories about losing their savings in the economic chaos of the 1990s contributed to a popular distrust in banks.
Ukraine, hit hard by the global credit crunch, is pinning its hopes on a loan of up to $14 billion from the International Monetary Fund to shore up the banking system, prop up the hryvna and support the country`s key steel and chemicals industries at a time when global demand fell.
Experts say the IMF loan may help the authorities to stabilize the financial sector.
Ukrainian Prime Minister Yulia Tymoshenko has said the country was close to getting the loan next week, but her standoff with President Viktor Yushchenko has threatened to torpedo the IMF deal. Parliament has to adopt a series of anti-crisis laws for Ukraine to receive the aid, but Tymoshenko`s allies have been blocking the work of the legislature all week, as part of a campaign to prevent Yushchenko`s order to hold early parliamentary elections.