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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PR Guy's picture

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

GetZeeGold's picture

 

 

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

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

 

 

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 !

 

Vampyroteuthis infernalis's picture

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

Groundhog Day's picture

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

Winston Churchill's picture

Only fiat, not like its real money.

Sterling Rod's picture

"This is gonna cost the EU"

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

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.

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.

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

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.

NoDebt's picture

Parabolic, bitchez!

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

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.

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.

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. 

PR Guy's picture

Do they have any oil? Oh dear.

Johnny Cocknballs's picture

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

The Globalist Fiat Banking Empire.

new game's picture

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

thanks for that concise comment!

BandGap's picture

The phrase that pays is "by the balls".

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

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.

Furthermore I would like to kindly ask that people refrain from asking questions to our staff: they have been instructed not to give any response or information. Please visit this page for further announcements and updates.

Sincerely,
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

Dollarmedes's picture

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

Uh, nothing?

I'm gonna go with nothing.

Invinciblehandaxe's picture

whats gonna happen to the ukrainian bitcoin minning monopoly?

maybe they will adopt bitcoin as their new currency, lulz

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....

LawsofPhysics's picture

Bullish for Ukrainian exports!!

Debugas's picture

really ?

right now russia is tightening imports from ukrain

Sean7k's picture

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

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)

Darth Stacker's picture

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

rsnoble's picture

NO DEFAULTS!!!!

jubber's picture

So this is bad for Gold obviously !!!!

jubber's picture

HUF also blowing out in sympathy

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!

Winston Churchill's picture

Careful what you wish for.

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

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

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.

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.

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.

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. 

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.

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

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?

f16hoser's picture

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

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.