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Ukrainian currency slumps as fraying peace deal raises economic fears Ukraine’s currency slumps as fraying peace deal raises economic fears
(34 minutes later)
KIEV — Ukraine’s currency touched record lows on Monday as fears of continued violence in the rebel-held east fueled pessimism about the country’s economic future. MOSCOW — Ukraine’s currency touched record lows on Monday as fears of continued violence in the rebel-held east fueled pessimism about the country’s economic future.
The currency slump came as the Ukrainian military said that it would not pull back its heavy weapons from the conflict’s front lines until pro-Russian rebels fully stop attacking them. Rebels leaders said that they have agreed to begin a fuller pullback starting Tuesday. The currency slump came as the Ukrainian military said it would not pull back its heavy arms from the front lines until pro-Russian rebels completely stop attacking them. Rebel leaders said they have agreed to begin a fuller pullback starting Tuesday.
A withdrawal of heavy weaponry is a key step in a cease-fire deal reached this month, but both sides have said fighting is continuing and has throw doubt about efforts to quell the 10-month-old conflict. A withdrawal of heavy weaponry is a key step in a cease-fire deal reached this month, but both sides have said that fighting is continuing, throwing doubt over efforts to quell the 10-month-old conflict.
Fighting between Russian-aligned separatists and Ukraine’s Western-allied government has claimed more than 5,600 lives in the worst bloodshed in Europe since the Balkan wars of the 1990s, according to U.N. estimates. [Related: Ukraine pleads for peacekeepers amid fighting]
On Monday alone, the Ukrainian currency, the hryvnia, fell 10 percent against the U.S. dollar before easing slightly — yet another painful hit to the nation’s flatlining economy. The combination of military setbacks and fiscal woes are increasingly threatening the pro-Western leaders in Kiev. Fighting between Russian-aligned separatists and Ukraine’s Western-allied government has claimed more than 5,600 lives, the worst bloodshed in Europe since the Balkan wars of the 1990s, according to U.N. estimates.
Ukraine’s currency has dropped 46 percent in February alone, and is down 71 percent in the year since President Viktor Yanukovych fled office after months of pro-European street protests. Amid the violence, the Ukrainian currency, the hryvnia, fell 10 percent against the U.S. dollar on Monday before regaining its losses — yet another sign of the nation’s flatlining economy. The combination of military setbacks and fiscal woes is increasingly threatening the leadership in Kiev, the capital.
The Ukrainian Central Bank on Monday announced new measures to try to stem the losses, imposing limits on Ukrainian businesses’ ability to purchase foreign currency. Ukraine’s currency has dropped 42 percent in February and is down 69 percent in the year since President Viktor Yanukovych fled office after months of pro-European street protests.
The Ukrainian central bank on Monday announced new measures to stem the losses, imposing limits on Ukrainian businesses’ ability to purchase foreign currency.
“We hope that we will be able to stabilize the situation using these measures,” Valeriya Gontareva, governor of the National Bank of Ukraine, said in Kiev on Monday, according to the UNIAN news agency. She vowed to combat the currency crisis, saying that “it destroys the economy and the whole banking system.”
The nose-diving currency puts even more pressure on government finances, making it harder for the country to buy energy, military hardware and the basics necessary for a war-hit population. It also sends inflation skyrocketing for any imported goods, meaning that ordinary citizens are effectively taking a sharp pay cut.The nose-diving currency puts even more pressure on government finances, making it harder for the country to buy energy, military hardware and the basics necessary for a war-hit population. It also sends inflation skyrocketing for any imported goods, meaning that ordinary citizens are effectively taking a sharp pay cut.
The plunge calls into question Ukraine’s ability to repay money it has borrowed from global creditors. The central bank’s reserves of foreign currency are scraping bottom, raising the prospect that the nation could soon go bankrupt. The plunge calls into question Ukraine’s ability to repay money borrowed from global creditors. The central bank’s reserves of foreign currency are scraping bottom, raising the prospect that the nation could soon go bankrupt.
Ukrainian military officials said Monday that ongoing violence meant they could not pull back their weaponry. Ukrainian military officials said Monday that the ongoing violence meant that they could not pull back their weaponry.
Lt. Col. Anatoliy Stelmakh told reporters in Kiev there were two artillery attacks overnight and although much fewer than in previous days, “as long as firing on Ukrainian military positions continues, it’s not possible to talk about a pullback.” Lt. Col. Anatoliy Stelmakh told reporters in Kiev that although attacks on Ukrainian military positions had “significantly decreased,” there were two artillery attacks overnight. “As long as firing on Ukrainian military positions continues, it’s not possible to talk about a pullback,” he said.
Under the internationally brokered peace deal reached in Minsk, Belarus two weeks ago, both sides are due to withdraw their heavy weapons from the front line to create a buffer zone. Ukrainian officials said Sunday they were planning to begin the withdrawal. Under the internationally brokered peace deal reached in Minsk, Belarus, two weeks ago, both sides are to withdraw their heavy weapons from the front lines to create a buffer zone. Ukrainian officials had said Sunday that they were planning to begin the withdrawal.
The statement came one day after a bomb killed two people Sunday at a march in the city of Kharkiv commemorating the first anniversary of the ouster of Yanu­kovych. Ukrainian officials said Russia was behind the attack. Rebel leaders, meanwhile, said they were planning a fuller pullback on Tuesday. Both sides have repeatedly said they would start withdrawing their weapons from the front lines, only to renege later. Last week, government forces were dealt a major defeat when they were forced to retreat from the strategic railway hub of Debaltseve. The violence came after the cease-fire was supposed to have gone into effect on Feb. 15.
Yanukovych had enjoyed the Kremlin’s favor, and when he fled from Kiev a year ago in the face of the huge protests on the Maidan, or Independence Square, that set in motion Moscow’s seizure of Crimea and the beginning of the separatist fighting in the eastern part of the country. The steep losses have even Ukrainian President Petro Poroshenko’s allies questioning the government’s strategy and military planning.
The attack is the latest in a string of bombings in Kharkiv over the past few months, including explosions outside a courthouse that injured 14 last month, outside a national guard outpost, near a military hospital and at a bar frequented by Kiev supporters. Kharkiv is about 90 miles northwest of the borders of the Donetsk and Luhansk regions, which pro-Russian separatists are seeking to claim as republics independent from Kiev. It was where Yanukovych made a brief stop on his flight into exile in Russia. Germany, the primary Western driver of the cease-fire deal, said Monday that it was losing hope about the peace plan’s prospects.
Ukrainian officials called the bombing an act of terrorism. “It is clear the implementation of the measures is not satisfactory,” Steffen Seibert, a spokesman for German Chancellor Angela Merkel, told reporters in Berlin. “What is decisive is a comprehensive cease-fire. It is worrying for the German government that we haven’t yet seen anything like this.”
Markian Lubkivskyi, a spokesman for the national Security Service, said that the alleged perpetrators of Sunday’s bombing had been trained in Russia and that their bomb had been made in Russia. The currency plunge came a day after a bombing attack on a pro-Ukrainian rally in the government-controlled city of Kharkiv that killed two people. A third victim, a 15-year-old boy, died Monday of wounds suffered at the rally, city authorities said. A spate of attacks in Ukrainian-held cities has sparked fears of new dangers even far away from the harshest fighting in the east.
The Kremlin did not comment on the Kharkiv attack Sunday, but in the past, Russia has denied any direct involvement in the Ukraine conflict. Daniela Deane in London contributed to this report.
The cease-fire’s efficacy has been in doubt since it was signed two weeks ago, as fighting in the key transport hub of Debaltseve only increased in the days after the agreement was struck. Pro-Kiev forces retreated from the city last week.
Pro-Russian rebels and the Ukrainian military did swap prisoners Saturday, an event officials on both sides of the conflict suggested could be followed by another exchange soon.
But military officials in Mariupol, a strategic port on the Sea of Azov, reported Sunday that rebels had launched an offensive to the east of the city.
Meanwhile, European leaders appeared with Ukrainian President Petro Poroshenko at events commemorating the Maidan anniversary in Kiev on Sunday, where the European Council president, Donald Tusk, suggested that Europe would soon revisit the subject of broadening economic sanctions against Russia.
Birnbaum reported from Moscow. Daniela Deane in London contributed to this report.