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Ukraine’s currency slumps as fraying peace deal raises economic fears Ukraine’s currency slumps as fraying peace deal raises economic fears
(35 minutes later)
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. MOSCOW — Ukraine’s currency touched record lows on Monday as continued violence in the rebel-held east fueled pessimism about the country’s economic future.
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. The currency slump came as the Ukrainian military said it will not pull back its heavy arms from the front lines until pro-Russian rebels completely halt their attacks. 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 that fighting is continuing, throwing doubt over 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.
[Read: Ukraine pleads for peacekeepers amid fighting][Read: Ukraine pleads for peacekeepers amid fighting]
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. Fighting between Russian-aligned separatists and Ukraine’s Western-allied government has claimed more than 5,600 lives, according to U.N. estimates. It is the worst bloodshed in Europe since the Balkan wars of the 1990s.
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. Amid the violence, the Ukrainian currency, the hryvnia, fell 10 percent against the U.S. dollar on Monday before recovering 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.
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. Ukraine’s currency has dropped 42 percent this month 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.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.”“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 prices of imported goods skyrocketing, meaning that ordinary citizens are effectively taking a sharp pay cut.
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.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 the ongoing violence meant that 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 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.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 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.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.
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.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.
The steep losses have even Ukrainian President Petro Poroshenko’s allies questioning the government’s strategy and military planning. The setbacks have even Ukrainian President Petro Poroshenko’s allies questioning the government’s strategy and military planning.
Germany, the primary Western driver of the cease-fire deal, said Monday that it was losing hope about the peace plan’s prospects.Germany, the primary Western driver of the cease-fire deal, said Monday that it was losing hope about the peace plan’s prospects.
“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.”“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.”
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 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 even in areas far away from the harshest fighting in the east.
Daniela Deane in London contributed to this report.Daniela Deane in London contributed to this report.