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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somecallmetimmah's picture

Suck it, "the Ukraine"!!!

swmnguy's picture

Just like "The" Ohio State University.  

Miss Expectations's picture

Victoria Nuland distracts Ukrainians with cookies while trucks loaded with gold make their way to the airport.

JRobby's picture

She looks like Trouble (with a capital T)

silverer's picture

The only hopeful development is what I've been hearing about the resistance of the Ukrainian natives being recruited to fight.  They are resisting the draft.  Few of them want this fighting.  Which shows that no matter what you hear in the USA media, the reality is that the Ukrainian citizens are not represented by their government, which I guess in this case is the US through the Ukrainian puppet setup.  The citizens of the Ukraine next should go on a letter writing campaign using US phone books, and just send letters to total strangers in the US, saying they don't want the war in the Ukraine, and can we come and live at your house while you send your sons and daughters to the Ukraine to fight the war for us?  Maybe that will get some attention in the Canadian press, at least?

Paveway IV's picture

Postage to the U.S. is now about a week's worth of wages in UAH. They can't afford to send letters to random U.S. citizens, and the NSA would have any that did make it shredded before they ever left the USPS sorting stations.

Irishcyclist's picture

We can add Ukraine to the list of countries such as Iraq which have been left broken following "western (ie. American and few other lickspittles nations) intervention"

Unfortunately it will be the ordinary Ukrainian citizen who will end up bearing the cost of this "benevolent" intervention.


Smegley Wanxalot's picture

 . . . "Ukraine Enters Hyperinflation"

HA!  Take that, Putin!  Hahahahha!

Ch08532's picture

Bullish on Samsonite! BUY BUY!

Fix It Again Timmy's picture

Look on the bright side Ukies - you now will not have to buy wallpaper nor toilet paper and you can heat your house, also... courtesy of the US State Dept. which continues on its march of astounding success stories.....

Tjeff1's picture

??  But zerohedge... theHryvnia rallied 16% today.  Currently at 28

Wild Theories's picture

and it was 13 just 3 months ago...

Took Red Pill's picture

and their stock market will go soaring! BUY BUY BUY

sam i am's picture

Italian actress Ornella Muti was sentenced to a hefty fine and eight months in jail for skipping a theater performance to dine with Russian President Vladimir Putin at a charity event on December 10, 2010.


are you scared yet?

Rumors that the Obama government just bought $1bln worth of body bags (300 mln bags). FEMA alone ordered 14mil body bags. 

Volkodav's picture

The article states fine or eight months in jail.

Please post truthfully.


Very tedious to wade through the inane and waste vulgar comments here as it is.

Speaking for those that come to ZH for information clear of various nonsense


Paveway IV's picture

FEMA doesn't call them 'Body Bags' anymore.

They are 'FEMA All-Climate Portable Housing Facilities' suitable for any North American internment camp. 

jmaloy5365's picture

Put out or get out slut, this is fight club. Links.....

JRobby's picture

Like there are 300 million body bags in inventories?

Or an order for 300 million would not be known about and take months or years to fill?

FrankieGoesToHollywood's picture

We are F*cked in the US considering its a felony to walk around with more than $10k in cash.  Confiscation at a minumum.

Sandmann's picture

You only carry cash in the US to pay cops a bonus

FrankieGoesToHollywood's picture

Its a delicate 10 seconds between "thats for you" and "we are taking it"

Wahooo's picture

I for one don't like giving cash to the cops. You just don't know what they'll spend it on. That's why I carry Dunkin Donuts gift cards.

Oldwood's picture

$10k is obviously proof of a crime. I mean, how else could a person get that kind of cash?

Work for it? Puleezze.

Sandmann's picture

Yes but the hyrvnia is only 3 years older than the Euro, viz.

The hryvnia replaced the karbovanets during the period 2–16 September 1996, at a rate of 1 hryvnia = 100,000 karbovantsiv. The karbovanets was subject to hyperinflation in the early 1990s following the collapse of the USSR.   Wikipedia

Jstanley011's picture

Priniting presses don't run themselves. Hyperinflation is a willful act by the politicos, and shutting down foreign exchange is an attempt to force their ever-more-worthless paper down the citzenry's throats. Next checkoff on the list is a political collapse. Another U.S. State Department success story, yay.

Hubbs's picture

Way to go US.  Another fucked up country/notch to add to your gun. 

swmnguy's picture

People misunderstand US policy, though more and more are getting wise to it.  You hear a lot of talk about US "failure" in Iraq, Afghanistan, Libya, Ukraine, Syria, etc.  Military intervention that only destroys civil society, the very worst elements of the society coming to power and wrecking and looting everything, complete collapse of economic and social structures, random chaotic bloodletting.  Yes, it certainly looks like "failure."

Then why does the US keep doing exactly the same thing, over and over?  Even the dumbest people don't repeat their mistakes so frequently.  And the people making policy in the US are far from stupid.

It's because this isn't failure.  This is success.  This is the intended result.  When Gazprom finally does shut off gas supply through Ukraine, that will be an even-greater success, particularly if it happens soon enough, while winter is still going on, so that EU nations shiver in the dark.

The "best and the brightest" making US policy knows we can use our military to destroy civil society in various handpicked nations, but our military isn't really designed to win a war.  It's designed to be able to project power to any place in the world we want it, and we're the only country on Earth that can do that.  So, we have created a ring of dumpster fires around  the perimeter of every potential rival to US global dominance; Russia, China, and the EU.  Those dunpster fire "failed states" sit on top of resources, or astride the paths to get those resources to market.  We have a boot on the throat of Europe's access to  energy.  We arm the very worst of the worst, who can't surrender or compromise because nobody would capture or negotiate with somebody who eats a man's heart on video.  The plan is to make Russia and China spend their energy stomping out flaming bags of dogshit on every one of their porches.

What looks like half-assed policy is intentional.  The collapse of Ukraine's economy will make Ukraine ungovernable, which gives the most-desperate, best-armed and cruelest the advantage.  Watch Nazi death squads destroy everything left in Ukraine, while a flood of refugees burdens every country in the region.

Next watch for "Muslim Extremism" in the -Stan countries, and maybe trouble with the Uighurs.  Not to build anything.  To destroy.  To "win" by knocking off any competitors, not by what one does oneself.  We're not exempt here in the US, either.  Note the careful way anyone making a living by working and getting paid is made into a target; while neo-feudal rent-collectors are held up as idols and "job creators" deserving of even more tax cuts.  The best way to dominate a society is to pit the nearly impoverished against the truly impoverished.  The nearly-impoverished will be ferocious out of fear they are downwardly mobile.  Hence the attempts to paint people working multiple jobs at starvation wages as "greedy," while pitting them against those who don't work at all, but sit home and collect enough money to remain in poverty.

Then there are the security-theatre rehearsals, like at the Mall of America this past Sunday.  What was that in aid of?  To condition people to seeing storm troopers while they shop, and then to rehearse said storm troopers for when they are used against their fellow Americans.  They'll  do it too; they're afraid of being impoverished themselves.

As soon as the Elites get tired of getting rich by cheating at the abstract game of Finance, and the winnings don't mean what they used to mean, they'll quite screwing around with abstractions and fiat notions and go for the real power of real things.  That's when they collapse the financial structures, probably on a Friday afternoon (2nd Friday of the month, I'm guessing, so the FSA has their monthly dole and is docile for a few weeks), and the weekend  can be used to reset the financial structure.  The ATM's won't work and the bank lobbies won't open, but automatic payments will still be deducted.

The chickens always come home to roost, no matter how far they've roved and what they've done in everyone else's yard. 

FrankieGoesToHollywood's picture

Thanks for the post.  I read every word.

Toolshed's picture

"Then why does the US keep doing exactly the same thing, over and over?  Even the dumbest people don't repeat their mistakes so frequently.  And the people making policy in the US are far from stupid."

I guess you are NOT a student of history. I suppose that statement also applies to the 1%, as they apparently have never heard of the French Revolution. Personally, I look forward to discovering what roasted banker tastes like. Not like chicken I'll wager.

swmnguy's picture

Actually, I read a lot of history.  I said what look like failures are the intended outcome of the policy.  The strategy is to win by pulling everyone else down.  I didn't say it would ultimately work.

The problem for the aristocracy in the French Revolution wan't that they were so stupid, it was that by the time there was a crisis, they had already made most of their options impossible.  I suppose that's stupidity in the long-term sense, but when you truly believe God put you on Earth to live in unfathomable luxury off everyone else's labor, you set up your priorities differently and act accordingly.  By the time you realize you're going to have to cut a deal with the torches and pitchforks crowd regardless of everything you've been taught, you've already eliminated pretty much all middle ground.  

It starts out simply enough; you can't compromise on your dominance because God put you on Earth to dominate, and the peasants on Earth to serve your every whim.  Eventually you can't  extract any more from your  peasants, but your darling mistress still needs those delicious Abyssinian  Weasel's Noses or no num-nums for you.  So you borrow to get the little princess what she wants.  Then you have to pay it back.  You can't extract it from your peasants, so you'll have to go to war. Who's going to do the fighiting? Not pretty you.  Your peasants will, out of the deep loyalty and awe they have for your personage.  And so on and so on.  Eventually, you're out of options.  You're going to have to fight to  the death, which is a bad deal because there's a lot more peasants  than there are yous.  Stupicity factors in there somewhere, but you're as well-educated as is possible in your time and place, and everyone you know thinks like you.

The 1% know their French Revolution alright.  They just think they'll avoid it by getting the masses all terrified about "terror," used to seeing stormtroopers when they go shopping, and by making  it easier to watch Dancing  With the Stars and Kim Kardashian's butt-selfies than doing anything about it.  The 1% know that's a temporary state of affairs, which is why they're militarizing the constabulary, legalizing all manner of repressive measures, and preparing  for a pre-emptive strike before the natives  get too restless.

I'm not sure that will work either, but that's what they're doing.

Ghordius's picture

enjoyed every word of it even though it's a terribly depressing read

I had, long ago, a discussion about the French Revolution with several scholars arguing that it only happened because the French Lords spent too much time in Versailles and Paris and too little time making sure the boot was "properly" set on the throath of the peasantry. They called "a side effect of too much Absentee Lordship", and argued that the American Revolution was a similar case

swmnguy's picture

Good Heavens.  Well, I can sort of follow that line of reasoning, but not very far.  What's the use of being an aristocrat if you have to spend all your time keeping the underlings down?  I think the problem comes from having aristocrats in the first place, myself.  

But then I would say that.  My ancestors all left Europe by 1640 because we were utterly incapable of being socialized, and we were barely here in North America before we started getting in trouble.  An ancestor of mine was hanged for witchcraft in Salem, MA in 1692 (long story short; if you own the piece of land between your wealthy neighbor and the main road, and won't sell at any price, something bad will happen to you through the systems your neighbor controls).  Other ancestors of mine got in trouble with the Quakers in Philadelphia in the 1680s for protesting that the huge amounts of money the Quakers were making in the human slave trade wasn't very...Quaker-like.  They went on to be hunted like dogs by Federal troops for their role in the Underground Railroad, some 160 years later.

So I come from a long line of troublemakers who simply won't play ball and do what it takes to get along.  It's long been a family aphorism that you always have a choice; even being a slave is a choice.  Yes, it's a terrible choice, and you would be killed for choosing the one way.  But you might be killed anyway, later, and still, it is a choice.  No wonder we didn't take well to subservience to either French or British aristocrats.  And we're not terribly keen on the modernized versions we see climbing back up here in the Colonies, either.

piratepiet's picture

"too little time making sure the boot was "properly" set on the throath of the peasantry"

Are you arguing the French revolution was a mainly a revolt by peasants ?   

The Chief's picture

Great stuff, swmnguy. My neighbor, a deputy in northern PA, is a realist. He says "its coming" and the M4's keep being issued. Every cruiser now has a fully automatic weapon and a shotgun. He says he'll be too busy fighting the Highway Patrol (State Police) to worry about the citizens in our small-ish town. Deputys and State Police hate each other here and are constantly trying to fuck each other over in their zany cop ways.

Almost Solvent's picture

The cops are to project 'force' - but are vastly outnumbered. 


If the real shit hits the real fan, troops would have to be mobilized as the local cops (including state police) don't have the numbers to wage an all out fight with all 'little' people. 


swmnguy's picture

The inter-agency rivalries us civilians don't know about give me a lot of concern.  Thanks for the insight.  When we think of the fabric of society unraveling, we mostly think of poor, non-white people coming to our house and taking our stuff.  We rarely consider all the other forces being held in balance, or in check, by mutual agreement, and what might happen if those agreements broke down.  For instance, I just drove to the hardware store and back.  I barely noticed the oncoming traffic, because I knew I would stay on the right-hand side of the stripe, and so would they.  I paid so little attention, in fact, I balanced my checkbook in my head while going to pick up some household items and drove back home.  What if I suddenly realized there wasn't anything keeping them, or me, on our sides of the road?  I don't mean cops and legal consequences; those are instruments of our all-encompassing mutual agreements.  I mean, what if we didn't all have it as a common interest to get where we were going unmolested?  That's the kind of stuff the Ukrainians are having to deal with, along with all the other beneficiaries of recent US largesse. 

JRobby's picture

Ok! Re-routing my summer vacation travels through northern PA. Thanks for the heads up..................

tired1's picture

'stupicity' - love it .

swmnguy's picture

I wish it had been intentional.

JRobby's picture

"Personally, I look forward to discovering what roasted banker tastes like."

Not me, thanks. Now the thump of their charred, headless corpses under my wheels sounds appealing. (heads must be piked in conspicuous locations)

Wahooo's picture

Them's some ugly chickens.

percyklein's picture

Next to last para makes the least sense. Not clear that the winnings won't mean enough to keep it all going. Further, they already have all the real power they want or need  (they can and do play with each other unendingly about who wins what).  The rest is prettty good, though, except it's also not at all clear that we start all these dumpster fires. Fighting to win no longer seems to be part of our playbook and that may indeed be purposeful. Else others with force of their own might become frightened and do irrationally destructive, desperate things. That, of course, interupts and threatens and therefore cannot be allowed.   

swmnguy's picture

Thanks, Percy.  It's just a theory, based on observation from a very un-privileged seat.  Nobody runs their grand schemes past me, the more fools they (I like to think).

I think the key is that money is imaginary in our system, but power and needs are not.  If fiat paper means I can't get enough money to buy food, I still need to eat.  That's rubber-meets-road time.  When all the money in existence won't get me food, that's all out the window, and all that matters to the 1%ers is whether they have made good enough use of their advantages before the crisis, and converted enough of that notional wealth into real assets, and can keep those assets and that power once the money itself is worthless.

I have no idea whether or not that will work.  It is not, as you say, clear that the winnings won't mean enough to keep it all going.  I'd suggest it's not at all clear that it will, though, either.  It does appear to me that that's the plan, however.

JRobby's picture

"Note the careful way anyone making a living by working and getting paid is made into a target; while neo-feudal rent-collectors are held up as idols and "job creators" deserving of even more tax cuts."

Wow! +10,0000. That was the heaviest thing I have read in some time. Thank you for your entire post.

css1971's picture

"The wealthy and powerful did not become wealthy and powerful through ignorance or stupidity. Therefore the deficiencies of the wealthy and powerful can never be adequately explained by ignorance or stupidity."



Icelandicsaga...............................................'s picture

Great post .. good insight .. I would add to find out what Ukraine will look like . or close.. look at what NATO did in the Balkans .. its a conduit for drug and sex trafficking .. Dyncorp and jihadies .. training ground for pissed off young Muslims .. its electricity part of the day .. and rubble that used to be towns and cities... I think you are correct this is being done on purpose. after the NATO .. UN Dyncorp war on the Balkans .. the West moved in .. Madeline Albright .. even Gen. Wesley Clark all made out like bandits with one scheme or another .. its just business boys and girls...

"Privatizing" Kosovo: The Madeleine Albright Way
forputin's picture

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