Ukraine Enters Hyperinflation: Currency Trading Halted, "Soon We Will Walk Around With Suitcases For Cash"

Tyler Durden's picture

Yesterday we summarized the most recent economic, political and social situation in Ukraine as follows:

"A year or so on from the last coup in Ukraine, Ukraine’s former Prime Minister Sergey Arbuzov told TASS, with growing popular discontent, "another state coup can’t be ruled out in Ukraine." As the cease-fire deal hangs torn and tattered in the Debaltseve winds, the nation is a mess: a new gas dispute looms as Gazprom demands upfront payments; capital controls have been tightened as the $17.5bn IMF loan may not be enough; and the central bank governor faces prosecution as the economy craters. All of these factors have driven massive outflows from Ukraine and the Hryvnia has crashed to over 33 to the USD - a record high (and 70% devaluation from the last coup)."

So as the Ukraine government watches its country go down in flames, with the blessings of the US State Department of course, it decided to take action. According to Reuters, with the hryvnia in free fall (see above) the central bank tried to call a halt on Wednesday by banning banks from buying foreign currency on behalf of their clients for the rest of this week.

Although banks could still trade with each other, by mid-morning there were no registered trades at any rate, leaving the currency in limbo. The previous day, the central bank rate based on reported trades had fallen 11 percent against the dollar.

Exchange kiosks on the streets in Kiev were selling limited amounts of dollars for 39 hryvnias, around 20 percent worse than the rates advertised in the windows of commercial banks where dollars were not available. This compares to the official rate of 33 USDUAH posted yesterday, a rate which will continue in freefall, now that the central bank has no more gold left to sell (it's mysteriously gone), and virtually no foreign reserves.

Following the closing of the FX market closing, the central bank has been able to artificially dictate the interbank rate, which it reduced from 32 to 24 hryvnias as of 12:45 p.m. local time. The artificial rate only affects exporters, who are forced to sell 75 percent of their foreign currency revenue to the National Bank at the rate.

Even the Ukraine government is shocked by what is going on: "I learned this morning on the Internet that the National Bank of Ukraine has, as usual on its own without any sort of consultations, made the decision to close the interbank currency market, which will absolutely not add to the stability of the national currency that the national bank is responsible for. This situation has a very complex and negative influence on the country's economy," Ukrainian Prime Minister Arseniy Yatsenyuk said.

The Ukrainian National Bank chairwoman Valeriya Hontareva, however, contradicted the Prime Minister's statement. "We coordinate all administrative measures with the International Monetary Fund first, and only then implement them," Hontareva told reporters.

In short: total chaos, which is indicative of any country's collapse into the hyperinflationary abyss.

It gets better. According to RIA, on Tuesday, Ukrainian television channel Ukraina announced that with the new exchange rate, the minimum wage in Ukraine stands at around $42.90 per month, which according to the channel, is lower than in Ghana or Zambia. There are currently no plans to raise the minimum wage until December.

Behold hyperinflation: "Food prices among producers rose 57.1 percent, with the price for grains and vegetables rising 91 percent from January 2014 to January 2015, while the official inflation rate over the period totaled 28.5 percent. Meanwhile, Ukrainian consumers responded to economic difficulties by cutting their spending in hryvnias by 22.6 percent, which amounts to an almost 40 percent decrease in real consumption."

And the punchline: "A construction worker exchanging dollars at a kiosk in a grocery shop in return for a bag filled with thousands of hryvnia, laughed and told shoppers: "Soon we will have to walk around with suitcases for cash, like in the 1990s.""

Which is ironic, because the central banks of "developed world" nations, most of which are now facing over 300% debt to consolidated GDP, would define Ukraine's imminent hyperinflation with just one word: "success."

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Oldwood's picture

Bullish for luggage and wheel barrows?

GetZeeGold's picture



Time to add some zeros...

NoVa's picture

The currency is called "Hernia" - WTF?


That is some funny shit.

swmnguy's picture

To revive another ZH oldie-but-goodie, "Green Sharts!"

Latina Lover's picture

But, but it's all PUTIN's fault, LOL.  The Ukraine is a joke that gets funnier each time you tell it.  Even the 3 stooges could do a better job than Porky and Yats

RafterManFMJ's picture

It's time for them to back the Ukie currency with its Central Bank gold reserves!!

Oh, wait...

Muddy1's picture

"the central bank governor faces prosecution"


Do you mean that there are countries where bankers face prosecution for their malfeasence??????

What a novel idea.

BaBaBouy's picture

Hey, I Gots' An Idea...Lets Start A WW3 Over This Relative Shithole Of A Place.

Pinto Currency's picture



UK sending military advisors into Ukraine - expecting palladium supply issues from Russia to London's LPPM.

China's supply of rare earth metals to the West also a question mark.

SumTing Wong's picture

But the locals just laugh and say SSDD- same shit, different decade.

Imagine when this comes to the U.S. People don't remember past last year's American Idol. The sheeple will be fooked.

Vampyroteuthis infernalis's picture

I wonder how the EU banks are going to feel when the default by proxy hits them. Roll in the tanks!!!

Soul Glow's picture

All banks are connected.  Japan, US, Europe, even China needs the debt cycle to continue.  No one is blinking but the game of chicken is almost over.  A flock of Black Swan's cometh.

And a footnote a group of swans is a whiteness so it is said, "A whiteness of Black Swans".  Cool, huh?

Latina Lover's picture

What is even sadder, is seeing the USSA reduced to sponsoring regimes of  such obvious poor quality. By now, it is well known among the Europeans that the Ukraine's coup government (with apologies to JSwift) is composed of the most odious little vermin to have ever suffered to crawl upon the surface of the earth Theirs is a truly disgusting example of everything that is wrong with government and psuedo capitalism.

Soul Glow's picture

It's crazy knowing it will collapse but we have no idea what it will look like.  Almost not worth spending time theororizing about it.  Might as well hit the bong and sit back.  We do have front row seats ;)

Stoploss's picture

I's got, it's I's gots.  It's in Ebonics 101...

jaxville's picture

  Nothing quite like a loss of credibility to get the monetary velocity going.

ATM's picture

He faces prosecution because the real bureaucrats need to save face and create a scapegoat. 

wallstreetaposteriori's picture

You would think some MFs would buy some gold....but no that is so 2010.

mkkby's picture

Nobody is going to trade gold for worthless hernias, which is what you get when you try to push the wheel barrow. 

I don't believe the construction worker story.  The economy there is, or soon will be, at a stand still unless someone has dollars or euro.  No business person is going to trade a valuable good for a suitcase full of paper.  It is unwieldy, expensive to get rid of, and falling in value every hour.

Maybe they should call it the hyena, because you are howling at the moon if you think it's worth something.

Al Tinfoil's picture

After Gazprom shuts off the natural gas because Kiev is not paying for gas received, the western Ukrainian lucky enough to have bushel baskets full of Hryvnia will be using them to heat the house.

Paveway IV's picture

Ukraine Accuses Russia of Destroying the Hryvnya Through Counterefiting

A TV finance show made the accusation. I'm guessing it runs on the TV station that Porky owns.

Source in Ukrainian

earnulf's picture

Actually, that is a tried and true tactic of war, counterfiet the other sides money and spread bundles of it around to destroy their economy.    Russia has the expertise to do so and has probably done so, not to mention counterfieting Dollars and Euros.   Not that they did (but they would be stupid not to)

Oldrepublic's picture

The Nazis made very high quality counterfeit British pound notes during WW II, they paid off a very high level agent with them in Ankara,Turkey during the war. I think the operation was called Cicero

Latina Lover's picture

It wouldn't surprise if one of the Ukie oligarchs and/or politicians was behind the counterfeiting scheme.

El Vaquero's picture

"It aint worth a continental!"


We printed too much back then, but IIRC, the Brits helped that devaluation along nicely.

cheech_wizard's picture

Didn't the CIA Director fly into Kiev with pallets full of hundred dollar bills? Who needs to counterfeit when you own the printing press?

As for Ukraine's currency... let's quickly follow the paper trail.

One hryvnya banknotes were printed by the Canadian Bank Note Company in 1992. Two, five and ten hryvnya banknotes were printed two years later. Until introduction into circulation the banknotes were kept in Canada.

The Canadian Bank Note Company is a Canadian security printing company. It is probably best known for being one of two private companies holding contracts with the Bank of Canada to supply it with Canada's banknotesFrom 1897 until 1923, CBN was a unit of the New York-based American Bank Note Company. It has since been based in OttawaOntario. In October 2006, RR Donnelley completed acquisition of Canadian Bank Note's financial printing business, consisting of documentation for initial public offerings...

RR Donnelley is a Fortune 500 company that provides print and related services. Its corporate headquarters are located at 111 S. Wacker Drive,Chicago, Illinois, USA.


tired1's picture

Ukraine also has problems with $100 super notes. The usual story is that the Norks were doing the printing. As of late the story is somewhat changed and there may be another source.

Also, some of the ME mercs are comlaining about being aid with phoney Benny Bucks (the irony).

I'm not waiting for conformation from MSM just like I'm not waiting for CNN to write about the two Brit planes being shot down by Iraqis for trying to supply ISIS.

Iraqi Army Downs 2 UK Planes Carrying Weapons for ISIL

zvzzt's picture

no need for russians involvement. ukraine government is very capable itself to destroy their currency..... 

Lanka's picture

Fire Sale on Ukrainian Brides and Grooms.

Son of Loki's picture

I'd love to buy two [or three!] of those gorgeous Ukrainian women for my "brides" but my Mom would complain; not enough room in th ebasement for them she'd say for sure.

Never One Roach's picture

Tell yur Mom it's for a good humanitarian cause. You can always try going to your Dad; he might be more understanding ::))

Crash Overide's picture

I feel bad for the people... the common folk seem to always get the worst of it.

I bet there is another coup within 3 months, if it takes that long.

Latina Lover's picture

I also feel sorry for the locals. If it wasn't for the USSA and EU, they would be living without hyperinflation or war.

Jack Burton's picture

We coordinate all administrative measures with the International Monetary Fund first, and only then implement them," Hontareva told reporters.

RaceToTheBottom's picture

Too bad that they don't have any gold remaining.  This would be the time they could use it.

Max Steel's picture

If hryvna was 8 to the USD and is now 30, then I say it has fallen 275%. Some people claim it is wrong to say so, because a currency cannot fall more than 100%, that is, down to zero. But in fact when we say it has “fallen 275%”, we mean that its value relative to the dollar has negatively changed by 275%. – When 1 becomes 2, then it has grown by 100%, when 2 becomes 1 then it has fallen by 50%. 
 Ukrainian financial system is in complete meltdown. Currency has fallen to 30 against the dollar (from 8 a year ago).

Ukraine will need a new currency

cigarEngineer's picture

formula is: (8-30)/30

Which yields the same result as the currency in dollar terms: (.03-.125)/.125

Max Steel's picture

Yup . A friend of mine is living in kyiv and earning in dollars . He is leading a fab life 

jaxville's picture

  Steel ....  I wonder if the EU will go that far?  I suspect they would rather have five million more gypsies in the EU rather than admit Ukraine, much less give (lend) them Euros to use.

 Ukrainians are just being used and are fools to buy into Western promises.

Max Steel's picture

Jax EU will certainly go that far because they don't think beyond fulfilling usa interests . Considering Ukies cheap labor even I can't understand how much cheap labor Western Eruope will abosrb ? Western europeans will endup loosing jobs in their own nation .

I agree ukies have been chucked  under a bus by west .

full figures for Russia's trade balance in 2014 are in.
Dollar surplus grew to 189bn from 182bn. ( )


1. China 88bn -0.5%
2. Netherlands 73bn -3.6%
3. Germany 70bn -6.5%
4. Italy 48bn -10%
5. Belarus 32bn -7.8%
6. Turkey 31bn -5%
7 Japan 31bn -7.3%
8. USA 29bn +5.6%
9. Ukraine 28bn -29.6%
10. Korea 27bn +8.5%

Actually Ukraine wasn't the biggest loser... that went to Switzerland, 7bn -39.7%.

 National Bank of Ukraine tightened capital controls (

DaveA's picture

The natural log of 30/8 is 1.32, so use that. Even better, you could say that the currency "fell by 132 centilogs". This method has two advantages:

* If the currency later rises 132 centilogs, it'll be back where it started. Whereas if your stocks lose 50% then gain 50%, you're still down 25%.

* For small changes, a centilog is close to a percent, e.g. +10 clog = +10.517%, -10 clog = -9.516%

Surveyor4Pres's picture

Whatever happened to the NAZI gold found by The Monuments Men in WWII?

I'm sure that Ukraine's gold has already been "repatriated" to the US and/or George Soros, by now.

Againstthelie's picture

Nazi gold = German gold = Goyim gold.

You know, to whom everything belongs...

flapdoodle's picture

I thought all the gold in Monuments Men was from the gold fillings of the victims of the Holohoax, so of course it really belongs to Israel?

Thirst Mutilator's picture

It fell into the hands of Grant_Heslov who used it to pay George Clooney & Matt Damon to do a stupid movie.

new game's picture

usduah, duh. how to kill an economy. only cost 5 billion plus another billion of arms funneled in.

such a deal. now we can enter the vacuum with hope and change and liberate all those pesky russians that don't want merican/nato hope and change. 

let the people determine the outcome. one can only image the outcome.

Paveway IV's picture

Porky will declare martial law soon, to be followed by his own frantic escape from the hell-hole he created (probably to Belgium or Switzerland).

Good thing he held on to the chocolate biz, bus maker and TV stations. There's no more money in government, anymore.

tired1's picture

Ukraine Signs Defense Deal With UAE

ABU DHABI — Ukrainian President Petro Poroshenko announced a deal for unspecified military and technical cooperation with the UAE on Tuesday, and said negotiations are ongoing with the United States and unspecified European nations.

The deal is a sign that Ukraine is not only seeking, but finding defense industry partners outside the region as it wages an uphill fight against Russian-backed separatists in eastern Ukraine. other news: Porky pokes bear with stick, again.

Paveway IV's picture

"...The deal is a sign that Ukraine is not only seeking, but finding defense industry partners [welfare] outside the region..."