Ukrainian hryvnia in free fall after Central Bank scraps currency support
The hryvnia lost 34 percent against the US dollar after the head of the central bank signaled it can no longer support the currency with regular interventions and will allow greater fluctuations. The hyrvnia hit a historic low of 24.5 per 1 USD.
With foreign exchange reserves at only $7.5 billion, the central bank “is changing its approach to monetary policy, while strengthening its rigidity,” according to a statement published Thursday.
After the policy shift announcement, Ukraine’s hryvnia fell to 24.5 against the dollar and 28.092 against the euro.
The bank also announced an unexpected interest rate hike to 19.5 percent from 14 percent, in a move to try and mend the worsening economic situation.
Foreign exchange reserves are at a ten-year low of $7.5 billion, down more than 60 percent since last year. In December reserves stood at about $10 billion.