Despite celebrations of de-escalations and truce in US equity markets (by asset-gathering commission-takers), the situation continues to go from bad to worse in the nation almost forgotten now that ISIS is stealing American headlines. The Hryvnia plunged 7.5% this morning - its biggest single-day drop on record - following the release of a scathing IMF letter and devaluation warnings from BofA. The IMF blasted Ukraine's "premature emission of extra money," and demanded it "immediately halt these gross abuses," as BofA warns of risk of "10-20% devaluation" in the next year is high given reserves are at a "critical level."
UAH plunges 7.5% to record lows this morning...
As far as the truce is concerned, we leave it to Bloomberg's Richard Breslow to explain the idiocy...
For a truce that people keep celebrating -- the 11th day -- there seem to be a lot of people still dying, troops moving around, still questions about more sanctions, ultimate effects on Russia eco, the local markets look quite ill.
Russia itself has put out dire f/casts, growth down 3%-4% and recession;
RUB made yet another all-time low, seems to have quieted, Micex is up, hryvnia getting pole-axed
Additionally Luhansk Rebels Would Like to Switch to Ruble, RIA Says
Self-proclaimed Luhansk People’s Republic hopes it won’t have to use Ukraine’s hryvnia much longer, RIA Novosti reports, citing republic’s leader Igor Plotnitskiy.
Plotnitskiy says political issues complicate matter, though he doesn’t expect hryvnia to be used for much longer: RIA
Luhansk still must resolve many economic, financial issues, including development of banking system: RIA
And then there is the IMF! (Source: e-news)
Which likely confirms BofA's warning of the potential for a Hyrvnia devaluation...
Central bank may have to further deplete FX reserves, now near “critical level” of $15b, Bank of America Merrill Lynch economist Vadim Khramov says in report
Natural gas purchases for winter to widen current-account deficit: Khramov
“We see risks of 10%-20% hryvnia devaluation from the current level within a year": Khramov
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But apart from that, everything is under control in Ukraine. Given the extent to which the UAH is falling and the strong language from the IMF, one could be mistaken for thinking the USA is pushing for another leader to be put in place once again...