Ukraine currency strengthens

09:25, 31 October 2008
Ukraine
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On hopes of IMF loan

Ukraine`s battered currency rose Thursday, partly on hopes the country could secure a hefty International Monetary Fund loan to overcome a severe financial crisis, AP reported.

The market responded to Parliament`s approval Wednesday of a series of stabilization bills, required by the IMF to receive the $16.5 billion loan.

Parliament must still approve the bills in a final reading Friday, after which the IMF would have to approve the aid package.

The Ukrainian economy, which grew strongly over the past four years, has been one of hardest-hit by the global crisis among emerging markets, and experts predict a recession next year.

The global credit crunch, coupled with problems at a key bank prompted a run on banks that cleared the system of $3.4 billion this month.

The hryvna closed at 6.15-6.25 to the U.S. dollar on the foreign currency exchange, according to the Inter Business Consulting agency, after reaching a record low of 7.2 to the dollar the day before. The currency has lost about a quarter of its value since the beginning of the year.

Currency traders also reacted to the National Bank`s offer to sell dollars to all players at close to the market rate. That, combined with a more transparent policy on the foreign currency market, had been a key demand of the IMF.

"This is a very positive dynamic," said Iryna Piontkivska, an analyst with Troika Dialog Ukraine. "The market has to believe that the National Bank is really doing this."

AP

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