Hryvna strengthens on stabilization moves

15:24, 31 October 2008
Ukraine
1204 0

The positive trend was due to expectations of a $16.5 billion loan from IMF

Ukraine`s central bank said Friday that it had won a promise from several top commercial banks to help stabilize the national currency, which has lost over a quarter of its value in a severe financial crisis, AP reported.

The hryvna kept rising slowly Friday, standing at 5.9-6.0 hryvna to the dollar in morning trading, according to the Inter Business Consulting agency. It sank to a record low of 7.2 to the dollar Wednesday, but recovered at 6.15-6.25 to the dollar the following day.

The positive trend was due to expectations of a $16.5 billion rescue loan from the International Monetary Fund and a more transparent policy of the central bank which has offered to sell dollars at close to market rates to all players.

Parliament was to hold a final vote Friday on a series of stabilization bills needed to secure the IMF loan.

Serhiy Kruglyk, head of the foreign relations department at the National Bank central bank, told The Associated Press Friday that several top bankers have promised to refrain from currency speculation and sell currency to retail customers close to the rate at which they buy it. That rate was 5.95 hryvna to the dollar Friday.

"The banks supported the idea that they must demonstrate stability of the national currency," Kruglyk said.

Ukraine is expected to plunge into a recession next year, hit hard by the global financial crisis. A drastic fall in demand for steel, the engine of the national economy, and investors fleeing emerging markets has left the country starved for foreign currency. Thousands of industry workers across the country are facing layoffs.

The banking sector lost over $3.4 billion this month as panicked clients rushed to empty their deposits and convert their savings into foreign currency. The stock market lost over 70 percent this year.

AP

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