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Ukraine Currency Crashes To Record Low; Abandons Dollar Peg

Tyler Durden's picture




 

Following yesterday's admission by the new head of Ukraine's central bank of the considerable bank runs in recent days and the rapid dwindling of central bank reserves, Sergiy Kruglik - the director of international affairs for the bank - announced this morning that Ukraine has adandoned the dollar peg and will adopt a flexible exchange rate. The Hyrvnia collapsed through 10.00 on the news and is now trading 10.40 at record lows against the USD.

 

 

As The Economist notes, on February 7th the National Bank of Ukraine (NBU, the central bank) finally devalued the official rate of the hryvnya, to HRN8.7:US$1.

The policy was then to set the peg to the dollar roughly in line with trading on the interbank exchange. At the same time, the authorities introduced more foreign-exchange controls.

This has now changed and the currency is in free-fall. One cannot but think this is a desperate attempt to force the hands of a bailer-out to move before total chaos ensues (and of course, as the UAH plummets so import costs of energy will soar).

 

Charts: Bloomberg

 

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Wed, 02/26/2014 - 09:22 | 4479577 PR Guy
PR Guy's picture

This is gonna cost the EU if they do try to 'rescue' Ukraine

Wed, 02/26/2014 - 09:25 | 4479583 GetZeeGold
GetZeeGold's picture

 

 

Convert that Ukraine cash into goods.....maybe a little gold.....quickly.

Wed, 02/26/2014 - 09:27 | 4479589 PR Guy
PR Guy's picture

UK news yesterdaY was reporting that all sorts of UK and US advisors are in the Ukraine offering the new 'government' advice on economic reform. No mention of less important things like democratic reform or governance.

They would be better off listening to this guy on economics!

http://www.youtube.com/watch?v=7QPxDugs0Nw

 

 

Wed, 02/26/2014 - 09:30 | 4479601 Occident Mortal
Wed, 02/26/2014 - 10:11 | 4479724 XXL66
XXL66's picture

We are fucked, Naftogaz delivers 80% of the gas to Europe...

You don't mess with Poutin, Verhofstadt (pronounce with german accent) is a mad lunatic Eurofile !

 

Wed, 02/26/2014 - 10:44 | 4479862 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

It's over, sovereign default on the way. Prepare for gunfire from AKs afterwards.

Wed, 02/26/2014 - 09:30 | 4479602 negative rates
negative rates's picture

And in Russian news the currency was pegged to the ruble and now is crashing in a free fall against it.

Wed, 02/26/2014 - 10:01 | 4479685 Groundhog Day
Groundhog Day's picture

ukraine in now hyperion slate the currency and pay back there dad

Wed, 02/26/2014 - 09:25 | 4479588 Winston Churchill
Winston Churchill's picture

Only fiat, not like its real money.

Wed, 02/26/2014 - 09:31 | 4479603 Sterling Rod
Sterling Rod's picture

"This is gonna cost the EU"

You mean because they will have to buy more ink or more printers?

Wed, 02/26/2014 - 09:37 | 4479612 achmachat
achmachat's picture

mainly because if you keep diluting a currency, at one point you can't keep the price of bread and milk artificially low in Euroland.

Wed, 02/26/2014 - 10:16 | 4479751 agent default
agent default's picture

It's  the Swiss that should be worried.  Ever since this crisis started the EU's only goal has been to loot Switzerland.

Wed, 02/26/2014 - 09:56 | 4479654 Max Damage
Max Damage's picture

Bullish as hell. A new carry trade. S&P breaks 2000 today on this vertical chart carry trade. Nothing could ever go wrong because there is no risk, the FED will bail us out

Wed, 02/26/2014 - 10:14 | 4479746 disabledvet
disabledvet's picture

why? sounds like euro's are worth a lot more money now...same being true of dollars.

it's not like they're hoarding rubles here either.

Wed, 02/26/2014 - 09:27 | 4479590 NoDebt
NoDebt's picture

Parabolic, bitchez!

Just what the EU wants to add to their ongoing freak show.... another country to bail out.

Wed, 02/26/2014 - 09:32 | 4479605 TahoeBilly2012
TahoeBilly2012's picture

That's the plan! To be able to have a currency which can be endlessly expanded and endlessly accepted in endless continual bailouts. This is called "slavery" according to the Bible.

Wed, 02/26/2014 - 10:18 | 4479759 disabledvet
disabledvet's picture

the Ukrainian dollar? who even owns the darn thing.

there is no volume here folks.
no one transacts in this currency.
we're becoming "faux news" and agreeing with ourselves about it.

Wed, 02/26/2014 - 09:28 | 4479596 semperfi
semperfi's picture

I pray for the good people of Ukraine.  They are caught in a nasty tug-of-war between East & West mainly due only to their geographic location. 

Wed, 02/26/2014 - 09:31 | 4479604 PR Guy
PR Guy's picture

Do they have any oil? Oh dear.

Wed, 02/26/2014 - 09:34 | 4479609 Johnny Cocknballs
Johnny Cocknballs's picture

no its mainly due to US/NATO/EU/IMF/WB cohesive shared policy.

The Globalist Fiat Banking Empire.

Wed, 02/26/2014 - 09:41 | 4479623 GetZeeGold
GetZeeGold's picture

 

 

ALL Wars Are Bankers' Wars

http://www.youtube.com/watch?v=5hfEBupAeo4

 

Wed, 02/26/2014 - 09:55 | 4479671 new game
new game's picture

summing it up, and the bullseye for anyone that gives a shit...

thanks for that concise comment!

Wed, 02/26/2014 - 09:32 | 4479606 BandGap
BandGap's picture

The phrase that pays is "by the balls".

Thank you for playing and......good luck.

Wed, 02/26/2014 - 09:32 | 4479607 hooligan2009
hooligan2009's picture

what has the hyrvnia and bitcoin got in common (apologies for dumping on multiple threads - just think this is a common battle/theme in a war)

February 26th 2014

Dear MtGox Customers,

As there is a lot of speculation regarding MtGox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues.

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Mark Karpeles

Dear MtGox Customers,

In light of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.

Best regards,
MtGox Team

Wed, 02/26/2014 - 09:39 | 4479617 Dollarmedes
Dollarmedes's picture

"What has the hyrvnia and bitcoin got in common?"

Uh, nothing?

I'm gonna go with nothing.

Wed, 02/26/2014 - 09:36 | 4479610 Invinciblehandaxe
Invinciblehandaxe's picture

whats gonna happen to the ukrainian bitcoin minning monopoly?

maybe they will adopt bitcoin as their new currency, lulz

Wed, 02/26/2014 - 09:40 | 4479621 youngman
youngman's picture

Well you get more bang for the buck in a bailout with a weak currency....now a dollar of bailout cash gets 10.1 Ukraine hyrvnia for it....

Wed, 02/26/2014 - 09:42 | 4479624 LawsofPhysics
LawsofPhysics's picture

Bullish for Ukrainian exports!!

Wed, 02/26/2014 - 09:47 | 4479636 Debugas
Debugas's picture

really ?

right now russia is tightening imports from ukrain

Wed, 02/26/2014 - 10:08 | 4479713 Sean7k
Sean7k's picture

Sure, because only Russia can import from the Ukraine. No one else needs their huge grain harvests or heavy industry. Really?

Wed, 02/26/2014 - 10:14 | 4479745 Non Passaran
Non Passaran's picture

Buy 1 bride get 1 for free

Wed, 02/26/2014 - 11:05 | 4479957 forwardho
forwardho's picture

Thats just good comedy.

Unless you are a starving Ukrainian woman, and your only asset is your Hoo Hoo.

We will live to see hunger become the greatest aphrodesiac ever known. (again)

Wed, 02/26/2014 - 11:54 | 4480162 Darth Stacker
Darth Stacker's picture

No thanks, one is enough for me. I'm 41 and she's 23 whooohooooo!

Wed, 02/26/2014 - 09:42 | 4479626 rsnoble
rsnoble's picture

NO DEFAULTS!!!!

Wed, 02/26/2014 - 09:42 | 4479628 jubber
jubber's picture

So this is bad for Gold obviously !!!!

Wed, 02/26/2014 - 09:43 | 4479629 jubber
jubber's picture

HUF also blowing out in sympathy

Wed, 02/26/2014 - 09:44 | 4479632 Dollarmedes
Dollarmedes's picture

Here's an open challenge:

Putin, you pussy. I dare you...DARE YOU to invade Ukraine. You will be slitting your own wrists you cowardly tyrant.

You know that of course, so you're going to rattle your sabre on the border trying to sucker the EU into bailing out Ukraine "before it's too late." You're a pathetic half-man, you loser!

Wed, 02/26/2014 - 10:01 | 4479682 Winston Churchill
Winston Churchill's picture

Careful what you wish for.

Just hope you are in Kiev, or you just another chickenhawk ?

Wed, 02/26/2014 - 10:09 | 4479721 Invinciblehandaxe
Invinciblehandaxe's picture

there will be no EU bailout for ukraine

you think ppl of europe want ukraine in?

bailing you nazis out while there is austerity

everywhere you look in europe??

dream on pussy

you will be begging russia to sent some money and gas

Wed, 02/26/2014 - 12:32 | 4480370 Dollarmedes
Dollarmedes's picture

"bailing you nazis out while there is austerity"

I'm in the US. I have nothing to gain, and nothing to lose so I won't be "begging russia to sent some money and gas." I'm not sure how this makes me a nazi.

Though I agree, an EU bailout would be a tough sell.

 

And yes, it's easy for me to be irresponsible with predicitons etc. because I incur no costs for doing so. In that sense, it's like the "investment" that's gone on due to QE.

Wed, 02/26/2014 - 10:23 | 4479769 agent default
agent default's picture

Yes, because if Putin invades, the EU, US, and NATO are willing to risk tangling themselves into what can escalate into a theater of operations from Sevastopol all the way up to Karelia.  Like fuck they would start a new Eastern Front to save Ukraine. 

Obama will just read a very strong but VERY STRONG statement of disapproval off his teleprompter and that will be that.

Wed, 02/26/2014 - 11:50 | 4480142 Dollarmedes
Dollarmedes's picture

I agree.

If Putin invades (Kiev, or the interior), the west won't stop him. But Ukrainians will go on general strike and Russia will be forced to pump in money to support whatever regime they prop up.

Meanwhile, who thinks Ukraine can take Sevastopol or the Crimea away from Russia? Not me. I don't think Ukrainians believe they can, either. I don't think anyone's even going to try.

Nobody stands to gain by cutting the Russian pipelines, so that's not an issue.

So what's the point of a Russian invasion? Nothing to gain, but it will cost a lot.

Wed, 02/26/2014 - 09:54 | 4479669 yogibear
yogibear's picture

That will teach any country to follow a debt addict (The US and the Federal Reserve).

The rest of the world needs to get as far away from the US dollar as they can.

Soon the US influence on credit agencies (threatening them prosecution) will be history. 

Wed, 02/26/2014 - 10:26 | 4479784 agent default
agent default's picture

That's why they are trying to rush in automatic information exchange through the OECD.  They know that in five years time nobody will give a fuck about the US and the EU.  Including the US and the EU.

Wed, 02/26/2014 - 10:02 | 4479692 ebworthen
ebworthen's picture

And to think that a little under 200 years ago the British, the Dutch, and the Prussians were allied to defeat France and Napoleon at Waterloo to defend Monarchies and Brussels.

http://en.wikipedia.org/wiki/Battle_of_Waterloo

Wed, 02/26/2014 - 10:06 | 4479707 BandGap
BandGap's picture

This isn't just about gas and oil. Ukraine grows a lot of wheat and they have deep water ports. This shit stretches out a few months and there will be even more hell to pay.

Vlad wants to wrap this shit up quickly. What the MBT for their armed forces? Still the T-98?

Wed, 02/26/2014 - 10:09 | 4479720 f16hoser
f16hoser's picture

Iceland did the same thing. Their fine now. What's your point?

Wed, 02/26/2014 - 10:15 | 4479730 Sean7k
Sean7k's picture

This is one of the most intelligent moves they could make. It eliminates the black market trading in dollars and allows business to have a true gauge for the value of goods. It will encourage exports and tourism because of the value of their currency is set by the market.

 

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