President Viktor Yushchenko said on Tuesday that Ukraine`s currency market was stabilising, with the hryvnia trading at about 7.8-8.0 to the dollar and levels of dollar purchases declining.

But Prime Minister Yulia Tymoshenko said the central bank had to stabilise the hryvnia at a considerably higher level of 6-6.5 within a week-and-a-half or face considerable problems with inflation, banking and other sectors.

The central bank offered to sell dollars at 8.0 hryvnias and to buy them at 7.8788 on the interbank market.

Yushchenko told a news conference that the central bank had bought $270 million over the past two days, but had been required to sell only $30 million on Tuesday.

But stabilisation, he said, had to wait until debts for Russian gas and other expenditures were accounted for.

"...Trades are being conducted at 7.8-7.9 and for the second day running the market is closing at 7.9," he said.

"Until debts are paid for gas, settling the debts of (national road network) Ukravtodor, it would be madness to talk about steps aimed at a fundamental, professional stabilisation.

"Everything that was like a marker, $3 billion (possible intervention from reserves), more than $2 billion set aside for gas arrears, $1 billion for repayment of a loan to Ukravtodorom, $200 million to (rocket maker) Yuzhmazh, leaves $400 million to defend the hryvnia."

The hyrvnia last week sank at one point to a historic low of $10/$ -- about half its value from last September.

But the currency began rising after the central bank resumed its interventions.

Tymoshenko, addressing a parliamentary debate on the budget, said that if the central bank failed to stabilise the hryvnia within a week-and-a-half "at the economically and financially justified level of 6-6.5/$, we will have big problems in our country with inflation, the banking system and the situation in every enterprise, every household".

Reuters via Guardian