The Ukrainian Central Bank has dramatically increased the discount rate from 14 percent to 19.5 percent per annum. The decision was announced Thursday by the head of the Central Bank Valeria Hontareva at a press conference in Kiev.
Immedeately after the announcement hryvnia lost 34 percent against the US dollar.
Ukrainian Central Bank cancels indicative Hryvna rate. Real Hryvna rate differed from indicative by 30%. Panic mood in markets — Gontareva
— *Russian Market (@russian_market) 5 февраля 2015
Moreover, all future currency auctions have been canceled until indicative exchange rate for hryvnia are determined.
At the moment the exchange rate is 24.5 hryvnias against the US dollar and 28.092 hryvnias against the euro.
On January 28, Washington and Kiev signed a declaration on cooperating in providing loan guarantees, with the United States giving Ukraine $2 billion.
Happening to Ukrainian #Hryvnia right now while John Kerry is arriving in Kiev for talks. The market is panicking pic.twitter.com/P8s40O3K3t
— Yury Barmin (@yurybarmin) 5 февраля 2015
Western financial institutions and individual donors have promised Kiev billions of dollars in credit to revive its economy and to undertake structural reforms. The International Monetary Fund (IMF) has pledged to allocate $17 billion in loans over a two-year period, while Brussels offered $2.1 billion.
