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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RagnarRedux's picture

Weimar 2.0, same ethno-oligarch crew at the helm! 

juggalo1's picture

Inflation is a monetary phenomenon, but hyperinflation is an economic governmental collapse phenomenon.

Rusty Nayle's picture

Quick!!! Better pay off debts Kiev!!! /s

redwater's picture

U.S. foreign policy is to take your gold and makes it rain paper:

Chad_the_short_seller's picture
Chad_the_short_seller (not verified) Feb 25, 2015 11:55 AM

Question to anyone who might know this. WTF is going on with RUSS when the last two days MICEX is down huge yet RUSS, which is the 3x etf bear russia, it shorts russian stocks, is down big too the last two days? WTF? Does anyone know? Thought it was time to short russia again, and it has been but wtf?

Herdee's picture

Can you tell tell the diffence though between Detroit and the Ukraine.There is no difference,that's the point.But the U.S. government would rather send their taxpayers' hard earned Dollars over there by the billions.It's very sick.

HowdyDoody's picture

If we ignore the use of tactical ballistic missiles, MLRS weapons, 150+mm artillery, cluster bombs, white phosphorus etc., there is no difference between Detroit and Ukraine.

Chad_the_short_seller's picture
Chad_the_short_seller (not verified) HowdyDoody Feb 25, 2015 12:26 PM

Could you imagine if the street thugs in detroit, or chicago, or new york, or baltimore, or any hardcore nigville? How soon before the jewge soros funds and arms the people in america to kill off and genocide whites?

Monty Burns's picture

Except that Detroit is poorer and more violent!!

Mike Honcho's picture

The US served democracy on a silver platter and this is what they do with it!

HardAssets's picture

" Didn't the Lone Ranger make his bullets out of silver? "

That's why he was such a good shot. Missing got expensive.

Volkodav's picture

NYT is terrible, been discredited here and now is bored subject.

That article is debunked already.

your kneejerk ignorance is showing



HowdyDoody's picture

Ukrainians should remember that Yankuovych was an evil dictator and life in Ukraine has improved since he was democratically overthrown by the US-financed coup.

Volkodav's picture

Hryvnia was stablized under Yanuk

Ukraine had more to gain from Russia's help than EU promises.

Majority Ukraine would prefer none of this happen and country proceeded orderly to scheduled election.


forputin's picture

Now even germans love Putin, they even created song for him:


Go Putin! Go Kim Jong-un!

Jack Burton's picture

This was predicted to be an outcome of their fast imploding economy. The majority of tax revenues paid to Kiev central government have come from the Industrial East. The very areas up in arms against the Coup Leaders in Kiev. The loss of industrial prodcution. The loss of their majority customer, the Russian Federation. The closing of the Ukrainian military industrial complex, that serviced the Russian federation. The failure of Fracking to take off, as much of the prime fracking patch is near or in the rebel held districts. The crony capitalism and oligarch capitalism. These have all stripped Ukaine of an economy.

The mass exodus to the west will soon begin to pick up speed. That is why the desperate desire for an EU membership, this would allow everyone to freely leave, for France, Germany and The United Kingdom. Given the chance, most people under 40 will leave.

Already, 1.2 million men of draft age live and work in Russia. Notice too that they are not going back to Ukraine, but putting down roots in the Russian Federation. Voting with their feet.

Two dogs's picture

I doubt that even Goldman-Sachs could polish this turd well enough to get Ukraine into the EU now.

hedgiex's picture

Crony Capitalism is Predatory on the People everywhere long term. The catalyst to the collapse comes when you are chosen as a proxy nation for fights.

Wastelands to be rebuilt like post war Japan & Germany only happen if the Empire is intact. The Empire is laden with drugs/debts and can only now pretend.

Beyond nationalties, there is once choice and that is to choose the overriding priority that this Age is one on Predators vs Preys. Ib any color, the Predators cannot have it going if the Preys know and act against the REAL ENEMY with no benefits of doubt. It is a BIG IF.

Two dogs's picture

How could things have got so bad so fast with Ukraine’s new finance minister, Natalie Jaresko, on board? She's a US citizen, ex-Harvard, ex-US State Dept, ex US Embassy in Kiev and former fund manager. They even granted her Ukrainian citizenship in December 2014, specially to take the job - so she must be something special. Obviously some serious errors in the reporting here because nothing short of deliberate sabotage could cause that kind of mess.

Monty Burns's picture

This is a reprise of the looting of Russia by the Tribe (Schleiffer, Rubin, Summers etc.) under the Yeltsin kleptocracy.

"Like in a typical Mafioso family there is an ethnic core and a hierarchy, with higher-ranking members making decisions that trickle down to the other members of the family."

Eahudimac's picture

The Ukraine situation really pisses me off. Certain people within the US government who are behind this deserve to die a slow and painful death for what they have caused in Ukraine. But what will happen in reality is that the people of eastern Urkaine will continue to die for nothing other than the amuzement and profit of some zionazi's in Washington and their banking pals. Fuck these people. If Putin is actually forced to invade Ukraine for real, I hope he shows no mercy. And for members of the CIA and other blank organizations who are over in Ukraine particilating in this madness, I hope you end up dead. Anyone knowing participating in the murder of the eastern ukrainians are committing war crimes and should be executed for the death and destruction they have inflicted on these civilians. 

The USA is obviously maneuvering to create a massive war in the middle east and to bring Russia into it. What comes around goes around America. 

Jack Burton's picture

I read the comments through. I note a distinct lack of the State Department trolls. ANd the honest Kiev backers who inhabit ZH in small numbers. Neither will comment on the fruits of the system they support. Silence is golden. How can they comment on what THEIR Coup has done to an intact democratic nation, with some semblence of an economy.

Two dogs's picture

The two down arrows immediately above your post indicate that we have currently one State Department troll in the area. Long lunch break? Checking with the boss on how to respond?

Monty Burns's picture

In a just world people (Nuland, Kerry et al) would hang for what they've fomented in Ukraine.

TNTARG's picture

Another "triumph" in the western's fight for "peace, freedom and prosperity", under the leading of the Great USA. Hurrah for "our" dictator!

vincenze's picture

I hope there will be quite a few slim and beautiful Ukrainian girls who won't want to work for $40 and will marry a nice American guy instead.

That's not possible with Crimean girls as they are pretty happy and have good salaries.

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

State has been a cluster fuck for . 20 years or more . the Clinton regime under Strobe 'Talbot filled it with female ivy league denizens who do not know their ass from a hole in the ground . Hillary tried to coopt faction of US military as Sec. State .. SOC  out of Tampa. the perfumed princes of Special Operatons Command and International Special ops .. she spoke to their conference a few years ago and wanted them . .to become shsdow diplomats .. so we got that BS going for us  NOT ..  AFTER THE Cold War .. we got SAndre Fluke clones .. we got idiots who went to school and got edmucated way over their pay grade... in other words the US State dept. is a shit hole of incompetence and pc ONE WORLD FITS ALL BS .. . has nothing to do with US interests but rather neocon marries progressisvism and had a  bastard child .. a monstrus FUBAR US policy demon from hell .. It used to be just Ivy League males.. now they screw it up with IVy League famales...

Jack Burton's picture

Four out of five office workers in Ukraine are considering emigration. The data of the poll conducted by international personnel portal HeadHunter testify to the fact. According to the poll 83 per cent of office workers are considering emigration. Most of those who are ready to leave the country work in oil and gas sector - every second worker of the branch has serious intentions to emigrate. The second place is occupied by health sphere workers - 38 per cent of them are intending to leave for good. They are followed by the workers of energy producing sector, metallurgy and industrial workers - 37 and 45 per cent respectively.

Monty Burns's picture

Another notch in the bedpost for the nation-wreckers.

joego1's picture

I think that the neocons may have bitten off more than they can chew with this one.

Monty Burns's picture

Maybe but it's the unfortunate people of Ukraine who are bearing the cost.  As always the armchair warriors get away scot free.

joego1's picture

God bless the poor souls.

juantrades's picture

Saw a similar article here, this is a pretty interesting opinion on it:

SmittyinLA's picture

this is your future America 

MeelionDollerBogus's picture

You'd think someone smart would realize you don't carry suitcases of cash - you carry suit cases and duffle-bags with booze, cigs & pills - anything easily carried yet has a high demand. Food would be good too but gets very heavy so that's where barter for fuel + trucks comes in play

Rootin' for Putin's picture

They wanted American style democracy and they got it, crooks in charge, police who beat the shit out of you and destruction of the middle class, while the .1% get richer.
All almost exactly a year.
Thats exceptionalism!