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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swmnguy's picture

One thing the Ruble is good for is buying stuff in Russia.  You see, it's a lot simpler when you're not trying to manage the world's default currency, and financing your own lavish lifestyle from that leverage.  Sure, the highs aren't as high, but most of us are only trying to buy stuff in our own countries.  So, for that purpose, were I a Russian trying to buy Russian stuff from Russian stores, yes, I would find the Ruble to be the best.  Certainly better than the Hryvnia.  Actually, I'd rather have Rubles than Hryvnia under any circumstances I can think of; even if I were a Ukrainian trying to buy Ukrainian stuff at Ukranian stores.

Hannibal's picture
Gazprom Could Halt Gas Transit after Ukraine Misses Pre-Payment

Russia's Gazprom said on Tuesday there were serious risks to gas transit to Europe via Ukraine after Kiev failed to pay in advance for supplies as a dispute between the two countries intensified

Jano's picture

u r right.


This year is the winter quite mild, compared to other years.

the gas storages in EU are quite full. EU will survive, if Ua blocks the delivery to EU, blackmailing EU to pay the Ukrainian bill to RUssia.

JRobby's picture

A mild winter should trigger an EU economic boom !!

The US has been cold and snowy so.............

Let's tune in to Yellen's testimony!!!!!

Jorgen's picture

They won't miss the payment. They are getting US$17bn loan from IMF.

swmnguy's picture

And that really exposes the fakery of the whole situation.  The US controls the IMF, for all intents and purposes.  The IMF is going to give money to Ukraine to pay the bill to Russia.  I say "give" because anybody expecting this money to be repaid is a silly person.  So it's just dandy to pay the Russians with Western money, as long as it tightens the noose around the necks of the Ukrainians, because the only way this debt can be settled is by the wholesale takeover of any Ukrainian assets of interest to the Western finance establishment.  They aren't going to take pallets-ful of still-wet newly-printed Hryvnia, I'll wager.

JRobby's picture

That is what I love about all this crap: IMF, World Bank etc. Any organization who lends to nations or large corps.

If I walked into a bank and said: "I need a loan because I have this big interest payment coming up and I won't have enough to make it and still keep my business running" they would throw me out into the parking lot (after extracting some sort of service charge from me)

mkkby's picture

But you STILL don't understand.  The IMF isn't lending money to a bankrupt entity that has no way to pay.  The backers of the IMF US/Israel want Ukraine to be loyal to their political cause... i.e. an enemy on Russia's border.  Leverage over the politics and perhaps some state assets are the payback.

Two dogs's picture

Anyone heard how Ukraine's EU-membership application is coming along? Be even funnier for Russia if they were also accepted into NATO.

Two dogs's picture

The prize for the winner here will be something like half a dozen Detroits. No wonder Putin is pushing for a cease-fire.

the grateful unemployed's picture

fast tracked. jim rickards says the only viable central bank type of organization left in the world after the collapse will be the IMF (which the US controls)

JRobby's picture

It must be sitting in "membership committee"

Two dogs's picture

Possibly, but they don't seem to be anywhere near the top of the in-tray yet (see here). "Currently, there are six candidate countries (Turkey, the former Yugoslav Republic of Macedonia, Iceland, Montenegro, Serbia and Albania) which are all at different stages in the negotiations. Bosnia and Herzegovina and Kosovo* are potential candidates who have been promised the prospect of joining when they are ready."

Al Tinfoil's picture

Iceland announced recently that they are dropping their application to join the EU.  Turkey said the same after Putin announced the diversion of the South Stream pipeline to Turkey.  This is after Turkey spent about 20 years trying to get EU membership, and the EU kept finding excuses to keep Turkey out.  Then Erdogan allowed that Turkey might consider EU membership if he got enough hugs and kisses (on which part of his body?).  Erdogan's message was clear: "Now I have the high ground bitches, now you can kiss my heiny."

WTFUD's picture

I will never forget 'where i was' ( where waz i?) when Poroshenko wept live crocodile tears on relaying,( the Brian Williamsesque type A B.S.) the moving stories of the woman who lost her hand ( as he was shaking it ) or the little girl who went blind when using an over-sized dildo on too tender a pussy . . . .

Such bad acting should however in my opinion be reserved for the likes of that other cunt , yes, Ms Tymoshenko.

rejected's picture

Trained by Robbie Parker....

Shekels's picture

We need to let the slavic cousins (Ukraine,Russia) solve their own problems, without American interference. The USofA has enough problems of it's own!

F em all but 6's picture

Currency trading. Exchanging one brand of toilet paper for another expecting the new roll has a few more sheets. And the shuffling of chairs on the titanic continues unabated.

Moribundus's picture

Do the junta bosses recognize their responsibility for the bloodbath into which they dipped Ukraine? Voluntarily – never. They’ll blame Yanukovich, the Party of Regions, the communists, the residents of Sevastopol, the “Berkut” riot police, “titushky”, Russia, Putin, “the polite people”, Strelkov, the militiamen, and many others, but never themselves and their owners, who helped “the transition of power”.

On the anniversary of a coup, which followed the massacre in Kiev, these people will play dumb, they will sing chants to the “heavenly hundred”, they will curse “enemies” who impede the “European future”, hypocritically turning a blind eye to what they turned Ukraine into. 








rejected's picture

Remember Obama said we brokered a change in government,,, now everyone knows what he meant by broke-red.

HowdyDoody's picture

Here's a video of what happened. Hundreds of Pravy Sektor thugs attacked a column of coaches, beating the passengers with billy clubs and setting some of the coaches on fire. The Crimeans got the message.

Johnny_is_already_taken's picture

Soon I may have to displace the $100 trillion banknote of zimbabue from the spotlight of my collection of failed fiat money.



sidiji's picture

yes but have you seen their stock market lately? woowzers!

rejected's picture

One would think by now the Ukies would have had all the ussa help they can stand!

DrNybble's picture

No help will be coming from a president who cannot (WILL not) acknowledge any threat except from his own people.

SirBarksAlot's picture

That's why a lot of them are fleeing to Russia.

Hell, they'll be fighting the US troops alongside the Russians!

yogibear's picture

Goldman is making money off of selling the wheel barrels. They bet big on the currency fail.

the grateful unemployed's picture

the joke goes an uncle living in Weimar Germany was taking a wheelbarrow filled with the money to the store to buy bread when he was robbed. the thieves took the wheelbarrow and left the money

DrNybble's picture

Ukraine's gold "mysteriously gone"?
Good thing gold stored in the US is far more secure.
It's so secure that the US government will not allow even an inventory (or even a viewing) of the gold in Ft. Knox?  Gold so secure HERE in the US that the government is very hesitant to return other nations' gold they have stored in NY for "safe keeping"?  I wonder why.

Mike Masr's picture

Fuck Ukraine and the EU!!

moratar's picture
moratar (not verified) Feb 25, 2015 10:18 AM

Ukraine OFFICIALY has 42,3 ton of gold.

Ok they admited like 4 months ago they have no gold.

Still official version is funny

the grateful unemployed's picture

they can move the ownership around on paper, they do it all the time with the SPR, its a more tangible form of phantom collateral

irongator's picture

They obviously don't want to be "Merican" bad enough. They should try harder.

GMadScientist's picture

And Gazprom shows them all what a real big swinging dick looks like...

zipit's picture

How do you say "Bitcoin, bitchez" in Ukrainian?

Catalonia's picture

Ok, let me see:


Ukraine / European Union

  • Nazi government yes / yes
  • ruined economy yes / yes
  • war in the east yes / yes


Congratulations, dear Ukranians! Now you fullfill all the requirements to join the union!

Two dogs's picture

And food-rationing now as well: "Restrictions apply for goods such as cooking oil, flour and sugar, Ukraine’s news agency UNN reports Wednesday. Retailers may sell no more than two bottles of sunflower oil, and two packs of buckwheat per customer and, depending on the store, from 3 to 5 kilograms of flour and sugar." At least cake isn't being rationed yet, so nobody needs to go hungry.

Apparently "people consider consumer electronics an investment as prices increase on a daily basis, RIA reports".  Gas appliances, maybe not so much.

Volkodav's picture

We buy bulk bag buckwheat no problem, no shortage

and old price as before. 


while Ukraine take pain, cos west Pollacks so smart

buy into EU lies

and result all Ukraine basket case


HardAssets's picture

Best Russian strategy ?

Stand back and watch it all implode on them.
When the Ukies feel enough self inflicted pain, watch them throw the bastards out themselves.

Then offer fair value-for-value trade deals.

The Western controlled media would probably call this the "imperialism of fair dealing".

SirBarksAlot's picture

Did Victoria Nuland run out of sandwiches? 

VooDoo6Actual's picture

Sheeple, it's what for Dinner...

Weimar Republic for the wn !

Da Da Dat Da Da Da Da ....



Soul Glow's picture

This is bullish for the dollar they'll say!  Bullish for the fucking dollar!

Hannibal's picture
US-NATO Military Convoy of Tanks and Armored Vehicles at Russia’s Doorstep, Rolling Along the Estonia-Russia Border

By Joost Niemöller

In the video below you can see a long column of military vehicles, including tanks and armored cars. This column, according to the caption, was filmed on 23 February in the border city of Narva, Estonia, The city is located on a reservoir that provides St. Petersburg [electric] power.

Latina Lover's picture

The NATO convoy will advance at least 10 miles into Russia, so that it is obvious to everyone that they illegally entered Russia, and then will disappear in a Mushroom cloud.

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

......... If the Russians allow tanks in ..  NYC  . DC . hope you got your bunkers well stocked and iodide tablets at the ready ...... the war will come to US .. we will not have to go looking for it in Ukraine or Estern Europe. The proxy war the WEST wants will not happen ... Russia is a lot stronger than during the Balkans 'war' . neocon and IMF NATO keep pushing this war with Russia ..  . they are going to get it good and hard in every orifice.. they deserve it.

HowdyDoody's picture

It's time for medium range nukes in Cuba - again.

Mike Masr's picture
Russia, China seek to form Asia-Pacific collective security system — defense minister