Tags: Ukraine | currency | Putin | Russia

Ukraine Currency Falls to Record as Bonds Extend Slump

Thursday, 10 April 2014 11:06 AM

Ukraine’s hryvnia plunged to an all-time low and the nation’s 2023 Eurobonds slid for a third day as a dispute over gas prices exacerbated the standoff with Russia amid continued unrest in the country’s east.

The hryvnia weakened 3 percent to a record 12.15 per dollar by 4:52 p.m. in Kiev, bringing the decline this year to 32 percent, the worst performance among global currencies tracked by Bloomberg. The yield on the government’s dollar debt due April 2023 rose seven basis points to 9.52 percent, the highest since March 25, according to data compiled by Bloomberg.

Ukraine won’t buy Russian gas to pump into storage for the heating season until a price is agreed, Energy Minister Yuri Prodan said today after Russian President Vladimir Putin told his government to draw up a plan to replace Ukrainian imports. Russia has ratcheted up pressure on its neighbor after annexing Crimea last month, ignoring sanctions from the U.S. and European Union, massing troops along its eastern border and raising gas prices.

“The Russian gas-price hike is not exactly improving the situation, nor the uncertainty over the very fluid situation in Ukraine’s eastern provinces,” John Hardy, Copenhagen-based head of foreign-exchange strategy at Saxo Bank A/S, said in e-mailed comments today. “I would steer clear of Ukrainian assets.”

Ukraine, which faces more than $9 billion in maturing debt and interest payments this year, according to data compiled by Bloomberg, expects to receive $13.5 billion of bailout funds including International Monetary Fund aid, Prime Minister Arseniy Yatsenyuk said April 4.

‘Essentially Insolvent’

“The country is essentially insolvent and entirely at the mercy of international institutions and Western aid,” Hardy said. “The path of escalation could be Ukraine cutting off gas deliveries that run through the country to the rest of Europe.”

Ukrainian sovereign debt maturing June 4 traded little changed at 96.92 cents on the dollar, as the yield rose by 120 basis points, or 1.20 percentage points, to 30.22 percent. The Ukrainian Equities Index advanced 1.1 percent to 1,098.41.

Ukrainian security forces continued an “anti-terrorist” operation in some eastern cities after freeing buildings seized by pro-Russian protesters in Kharkiv. The activists want a referendum on joining Russia and a boycott of Ukraine’s May 25 presidential election.

Putin said today Russia can’t subsidize its neighbor forever and urged talks before a possible switch to advance payments for natural gas. Prime Minister Dmitry Medvedev said Ukraine owes $16.6 billion in energy debts, while Finance Minister Anton Siluanov said Ukraine is seeking a $3 billion loan.

“Russia is putting substantial economic, military and political pressure on Ukraine, and we do not expect Russia to step back until its demands are met,” Vadim Khramov, a London- based analyst at Bank of America Corp., wrote in an e-mailed report today.

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Ukraine's hryvnia plunged to an all-time low and the nation's 2023 Eurobonds slid for a third day as a dispute over gas prices exacerbated the standoff with Russia amid continued unrest in the country's east.
Ukraine, currency, Putin, Russia
Thursday, 10 April 2014 11:06 AM
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