There’s one sure benefactor of the current political – economic crisis in Ukraine. Here’s a hint: It’s not Yanukovich, the recently deposed President who absconded to Russia with literally billions of Ukrainian hryvna belonging to the country’s financial reserves. Yanukovich, however wealthy he may currently be, is a wanted man who will ultimately be handed over to The Hague for trial. Unfortunately, it’s also not the Ukrainian people, who no sooner shed enough blood to unseat a number of corrupt high officials then woke to an occupied Crimea. Russian-armed “protesters” occupying the regional airports and parliament buildings will be embedded there a long time unless Ukraine takes violent countermeasures. Bad, bad idea.
The one immediate benefactor to Ukraine’s turmoil is George Washington. Or rather, George Washington’s image. On the dollar bill.
According to an article from the UK media source Euronews:
“Ukraine’s currency, the hryvna, fell to a new record low against the dollar on Thursday. It has been falling in value for weeks due to the political and economic uncertainty in the country. But the decline accelerated after parliament stripped President Viktor Yanukovych of his powers on Saturday. Ukraine’s central bank said it was not going to buy the hryvnia to support it – anyway it is running out of foreign currency reserves to do that.
Economists believe devaluation is justified given the country’s economic circumstances. Ukraine’s new Prime Minister Arseniy Yatsenyuk said securing a loan agreement with the International Monetary fund is vital for the country to stabilize the hrynia. He told parliament: “We need immediately to sign an agreement with the IMF. As soon as a deal on an IMF program has been signed, money will come for our reserves
At one point in the last week, the hryvna exchanged at a rate of twelve – twelve US dollars! I suppose a further benefit to the decline of the hryvna is that with so many Russian roubles previously invested in the Ukrainian economy and the military exercises now being conducted on and near Ukrainian soil, the rouble appears to be falling along with it.
From the Moscow Times, February 14th:
“The Russian currency continued its recent slide Wednesday, reaching its lowest level against the dollar since 2009 and recording a historic minimum against the euro. The euro was worth more than 49 rubles during morning trading, while the dollar rose to 35.59 rubles, its highest level against the ruble since March 2009, according to data from the Moscow Exchange.
The ruble has led 2014 declines by emerging market currencies. This year the currency has lost over 6 percent of its value against the euro-dollar basket, the benchmark used by the Central Bank.
Russian officials have denied that the authorities are deliberately allowing the ruble to weaken in order to raise export revenue and stimulate the country's flagging economy.”
Despite gains by the dollar against both currencies, it’s doubtful John Kerry will gloat over the phone to Russian Foreign Minister Sergey Lavrov as they discuss the political crisis in Crimea. Though the dollar always fairs well against the rouble, Russia has invested billions of roubles in America’s economy, a sticking point in negotiations over Russian aggression campaigns like this one, and the 2004 invasion of Georgia.
Businesses specializing in tourism and travel, such as Phoenix, Arizona-based A Foreign Affair, see an advantage coming to the hundreds of men it will accompany to Ukraine this year. “Obviously, we feel tremendously for the people of Ukraine. Yet, clearly, with these kinds of gains, Americans will simply get more for their money in cafes, restaurants and shopping malls and will see better prices for hotels and airfare options.” Says Bud Patterson, A Foreign Affair Vice President. “I can just see guys’ eyes light up at the currency exchanges.” Good news for A Foreign Affair this is, as many of its clients will visit Ukraine in pursuit of it’s greatest natural assets – millions of beautiful, marriage minded women.
American ex-pats looking to purchase real estate or start business ventures might encounter a bureaucratic snag here or there, but Ukraine’s growing interest in the dollar should encourage investor brevity. What remains to be seen, is whether or not anticipated loans from the International Monetary Fund and additional loans from the US and UK to restore Ukraine’s reserves will return the dollar to it’s previous levels.
1stworldview