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Ukraine seeks to end 'panic' over sliding currency

24 september 2014, 09:55

  Ukrainian leaders sought Tuesday to reassure financial markets by pledging action to shore up the national currency, which has hit record lows over the conflict in the east and the dire state of the economy, AFP reports.

President Petro Poroshenko held talks with leading cabinet ministers, central bank governors and the heads of several major banks to try to stabilise the situation.

Prime Minister Arseniy Yatsenyuk blamed "panic" and "speculation" for the slide in the hryvnia, which has plunged more than 40 percent this year despite central bank intervention.

Officially the rate set by the bank was 13.53 to the dollar on Tuesday, although on the interbank market it was trading at lows of around 14.9.

The currency was quoted officially at 17.3 against the euro on Tuesday, while on the interbank market it was trading at 19.25.

On Monday, the central bank announced a series of measures tightening its capital and exchange controls, including limiting cash purchases of foreign currency to 3,000 hryvnias a day.

The hryvnia has been battered by the deadly pro-Russian insurgency in the industrial east over the past five months, which added to the deep economic malaise in the former Soviet state.

Ukraine is being propped up by a $27 billion rescue package from lenders including the International Monetary Fund and the European Union.

But the European Bank for Reconstruction and Development last month forecast that its economy would shrink by nine percent this year.

Finance Minister Oleksandr Shlapak warned that if the hryvnia sank below 15 to the dollar it could accelerate a decline in bank deposits and threaten the country's financial system.

But he said the government had the necessary financial instruments to support the currency to push it back towards 13 to the dollar.

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