How The Financial Crisis Is Affecting Eastern Europe

KIEV, Ukraine -- Russian President Dmitry Medvedev said on Friday officials were working too slowly to ease the economic crisis. Russia's $1.7 trillion economy is set to contract this year for the first time in a decade and unemployment is soaring.
Following are some details of how the financial crisis is affecting Russia and some other countries in eastern Europe:BULGARIABulgaria's farming industry, once a main stay of the economy, has shrunk to 5 percent of GDP from 25 percent in the past decade. Cash-strapped producers suffered again in 2008 after the EU froze millions in farm aid over graft. The crisis may erase Bulgaria's gains over the past decade because its main export market, the EU has fallen into recession. Trade unions say some 50,000 people are likely to lose their jobs in 2009.CZECH REPUBLICThe economy is highly open and dependent on exports, which in gross terms account for about 70 percent of GDP. The financial system has been relatively unaffected by the initial phase of the global financial crisis, but was hit from a collapse in demand. Over 45,000 people lost their jobs in January, bringing the unemployment rate up 0.8 percentage points to 6.8 percent, the highest level since April 2007.HUNGARYHungary, which escaped the crisis by way of a $25.1 billion IMF-led loan in October, planned to cut its budget deficit below 3 percent of GDP and decided on new spending cuts worth 200 billion forints ($835 million) in 2009 to prevent an overshoot. The economy is under pressure from a collapse in demand in the euro zone, its key export market, and the economy is expected to sink into a recession of up to 3.5 percent.POLANDEconomic growth slowed to 4.8 percent in 2008 from 6.7 percent in 2007 and analysts expect it to slump to 1.4 percent in 2009.ROMANIADecides this month whether it needs to help from the EU or the IMF. The unemployment rate rose to 4.9 percent in January from 4.4 percent the previous month. Several major industrial companies announced job cuts after demand was hit.RUSSIARussia's economy is set to contract this year for the first time in a decade. About 300,000 Russians lost their jobs in January as collapsing commodities prices and months of market crisis hammered the real economy. The number of jobless jumped to 6.1 million or 8.1 percent of the workforce versus 7.7 percent the previous month. The government forecast on Tuesday the economy would contract by 2.2 percent in 2009. Growth in retail sales slowed in January to 2.4 percent year on year and a 16.3 percent increase in Jan. 2008.SERBIASerbia expects to conclude a 2 billion euro ($2.52 billion) loan with the IMF by April as growth is seen falling far short of earlier official estimates, Prime Minister Mirko Cvetkovic said on Friday. He said it will most probably grow between 0.5 and 1 percent after the fall in fiscal revenues since the beginning of the year. By contrast, last week Serbia's central bank said the economy was most probably heading into recession. Serbia's economy grew 5.5 percent in 2008.SLOVAKIASlovak industrial output fell by 16.8 percent year-on-year in December, the sharpest fall at least in 10 years. Slovakia expects its export-oriented economy to be hurt by the crisis as demand for its products slows in the West.UKRAINEIndustrial output has shrunk by over a third -- the worst drop in over a decade. Machine building and mineral production both contracted by over half year-on-year. Thousands of workers have been put on unpaid leave as a consequence of the drop. Ukraine's banks have also been hit as its hryvnia currency plummeted, with three banks put in receivership last week, including the seventh largest, the Nadra Bank.Political turmoil has delayed policy making to combat the crisis and has threatened a $16.4 billion loan from the International Monetary Fund, which failed to agree last week on disbursing a second, much-needed tranche.

How low can the rouble go?

The rouble this week was hovering close to the Central Bank's latest line in the sand, 41 to the dollar, after the government has spent some $200 billion - one third of its international reserves - in managing the currency's decline against the dollar/euro basket in the last six months.
Most experts expressed some hope that the new trading floor would hold, but said a lot would depend on how long oil prices stay low
Yevgeny Gavrilenkov (chief economist, Troika Dialog): "In principle it is easy for them to keep the rouble at 41 against the basket. They have to stop lending roubles because the macroeconomic fundamentals mean they have to adjust the balance of payments to the oil price.
There is liquidity in the banking system but every day they inject more. A week ago it was still 800 billion roubles a day, although it is decreasing now. Liquidity was injected but banks lacked it because it went straight to the foreign exchange market. They need to raise interest rates to something that prohibits speculation, 20 per cent, 30 per cent, 1,000 per cent if necessary for a short period of time.
There is a need to adjust the currency to economic reality because the rouble was overheated in previous years on the back of high and permanently rising oil prices. It is back to what it was four years ago in real terms.
Ideally we need a floating ex­change rate, but as long as they keep lending money at a negative real interest rate it will be very difficult to find the bottom."
Martin Gilman (professor, Higher School of Economics, and a former IMF representative in Russia):
"The government can protect the rouble in the short run. They have almost $400 billion in reserves to back up their exchange rate policy. However, they wouldn't want to throw all their reserves at the exchange rate.
It is critically important that the population does not panic because the greatest danger to the rouble is if the population has a run on it. In that respect, the Central Bank's policy of small step devaluations has been sensible as people have moved deposits into dollars.
The Central Bank can hold the rouble around 41 against the basket providing oil stays above $35. Below that they will have to expand the band. In the longer term if oil prices do deteriorate they should not even try to protect the currency.
Monetary policy should be tightened, which they have been doing over the last few weeks. If you can create a demand for rouble liquidity with higher interest rates this will discourage conversions into foreign exchange."
Alexei Moisseyev (deputy head of research, Renaissance Capital):
"As­suming oil prices hold, it is likely that the rouble will be controlled by the Central Bank at the current level - 41 to the basket, though clearly the dollar-rouble rate could fall further as a result of a decline in the euro.
I think we could expect the world economy to start showing some tentative signs of recovery by the second half of 2009, which would result in a rebound in commodity prices towards more sustainable levels, which, in turn, will lead to the rouble strengthening.
As far as trade, and, more broadly, the current account are concerned, the existing rouble value is fair. However, it is clearly not sufficient to cover the upcoming debt payments of Russian banks and corporations, so there is no realistic equilibrium value at the moment. Debt payments are high, so the Central Bank will have to continue to support the current exchange rate via its reserves.
In the medium term, the dollar will weaken as a result of expansionary monetary policy, which will also help the rouble strengthen against the dollar."
Ronald Smith (head of research, Alfa Bank):
"The market will test the current trading band for the rouble but there are no calls for further devaluations. At the moment it is at about the right level and it is hard to see it going further.
The stability of the managed float has helped investors and traders but too much of the reserves have been expended. The rouble should have been devalued to this level much earlier on and then held at a weaker value. However, if they let it float freely it will create unwanted instability.
In the medium term, the rouble depends on the oil price. If the U.S. Federal Reserve prints too much money, oil prices will go up again but too little and prices will go down. Nobody expects them to get it right.
At the moment the Central Bank is providing rouble liquidity but this is immediately being converted into dollars. However, the banking system needs it so they have a double problem."

How low can the rouble go?

The rouble this week was hovering close to the Central Bank's latest line in the sand, 41 to the dollar, after the government has spent some $200 billion - one third of its international reserves - in managing the currency's decline against the dollar/euro basket in the last six months.
Most experts expressed some hope that the new trading floor would hold, but said a lot would depend on how long oil prices stay low
Yevgeny Gavrilenkov (chief economist, Troika Dialog): "In principle it is easy for them to keep the rouble at 41 against the basket. They have to stop lending roubles because the macroeconomic fundamentals mean they have to adjust the balance of payments to the oil price.
There is liquidity in the banking system but every day they inject more. A week ago it was still 800 billion roubles a day, although it is decreasing now. Liquidity was injected but banks lacked it because it went straight to the foreign exchange market. They need to raise interest rates to something that prohibits speculation, 20 per cent, 30 per cent, 1,000 per cent if necessary for a short period of time.
There is a need to adjust the currency to economic reality because the rouble was overheated in previous years on the back of high and permanently rising oil prices. It is back to what it was four years ago in real terms.
Ideally we need a floating ex­change rate, but as long as they keep lending money at a negative real interest rate it will be very difficult to find the bottom."
Martin Gilman (professor, Higher School of Economics, and a former IMF representative in Russia):
"The government can protect the rouble in the short run. They have almost $400 billion in reserves to back up their exchange rate policy. However, they wouldn't want to throw all their reserves at the exchange rate.
It is critically important that the population does not panic because the greatest danger to the rouble is if the population has a run on it. In that respect, the Central Bank's policy of small step devaluations has been sensible as people have moved deposits into dollars.
The Central Bank can hold the rouble around 41 against the basket providing oil stays above $35. Below that they will have to expand the band. In the longer term if oil prices do deteriorate they should not even try to protect the currency.
Monetary policy should be tightened, which they have been doing over the last few weeks. If you can create a demand for rouble liquidity with higher interest rates this will discourage conversions into foreign exchange."
Alexei Moisseyev (deputy head of research, Renaissance Capital):
"As­suming oil prices hold, it is likely that the rouble will be controlled by the Central Bank at the current level - 41 to the basket, though clearly the dollar-rouble rate could fall further as a result of a decline in the euro.
I think we could expect the world economy to start showing some tentative signs of recovery by the second half of 2009, which would result in a rebound in commodity prices towards more sustainable levels, which, in turn, will lead to the rouble strengthening.
As far as trade, and, more broadly, the current account are concerned, the existing rouble value is fair. However, it is clearly not sufficient to cover the upcoming debt payments of Russian banks and corporations, so there is no realistic equilibrium value at the moment. Debt payments are high, so the Central Bank will have to continue to support the current exchange rate via its reserves.
In the medium term, the dollar will weaken as a result of expansionary monetary policy, which will also help the rouble strengthen against the dollar."
Ronald Smith (head of research, Alfa Bank):
"The market will test the current trading band for the rouble but there are no calls for further devaluations. At the moment it is at about the right level and it is hard to see it going further.
The stability of the managed float has helped investors and traders but too much of the reserves have been expended. The rouble should have been devalued to this level much earlier on and then held at a weaker value. However, if they let it float freely it will create unwanted instability.
In the medium term, the rouble depends on the oil price. If the U.S. Federal Reserve prints too much money, oil prices will go up again but too little and prices will go down. Nobody expects them to get it right.
At the moment the Central Bank is providing rouble liquidity but this is immediately being converted into dollars. However, the banking system needs it so they have a double problem."

Companies Switch From Rubles to U.E.

In a throwback to the turbulent 1990s, some real estate companies and car dealers are repricing their fees in "conditional units" instead of rubles.While conditional units — known as u.e. in Russian — were originally a euphemism for the U.S. dollar during the period of the ruble's instability in the 1990s, it has since come to represent values ranging from the dollar to the euro to a ratio between the two. The government, fueled by complaints from confused buyers and pride in the then-robust ruble, initiated a crackdown on conditional units from 2004 to 2006. But a loophole provided by two competing pieces of legislation suggests that there is room to maneuver.Companies are maneuvering as they scramble to minimize losses from the depreciating ruble, which has lost nearly 20 percent of its value since November. The Central Bank said Thursday that it had "finished" with the devaluation of the ruble.Real estate developer PIK Group began listing its prices in conditional units at the beginning of January, spokeswoman Natalya Konovalova said. The company calculates the mean of the dollar and the euro based on Central Bank rates, and clients pay the company the equivalent amount in rubles."The use of conventional units was around four years ago, and now because of the economic downturn a lot of builders are using this form of measurement again," she said.Most developers are quoting prices in dollars or conditional units these days, she said.The use of conditional units is appearing in other sectors as well. Advertising agency Begun has started selling online ads for 2 to 50 conditional units apiece. The trend is also popular in the auto sector, where foreign cars produced by BMW, Toyota, Mazda and Mitsubishi are priced in conditional units based on euro or dollar rates, Autonews.ru reported.Natalya Orlova, chief economist at Alfa Bank, said that other sectors were also likely to return to conditional units if the ruble remained volatile."If the ruble exchange rate doesn't stabilize at a level of 30 to 33 rubles a dollar in the coming two or three months, then I think a lot of companies will think about using" pricing such as conditional units, Orlova said.So far, the re-emergence of conditional units appears to have occurred primarily in the real estate sector, one of the hardest hit by the financial crisis. Property firm DSK-1, which like PIK received bailout loans from Vneshekonombank, announced this week that it would begin pricing apartments in conditional units after Feb. 1. DSK-1 refused to comment on the decision Thursday.The real estate sector has a history of pricing in dollars, and it was only briefly during the first half of 2008 that landlords began switching to the ruble, betting that the currency would appreciate, said Alexei Yazykov, a real estate analyst for Renaissance Capital.The practice of pricing in conditional units used to be popular with hotels, airlines, restaurants and supermarkets. In 2006, a U.S. lawyer sued Hyatt, Radisson and Marriott for using unfair conditional unit exchange rates in Moscow. Radisson and Marriott said they had not decided to use conditional unit prices again, but one hotelier said it would be a good idea."Today the hotel is losing quite a bit due to the exchange rate. What the government needs to do is allow [businesses] to go back to either conditional units or euro rates," said Michel Stalport, area vice president for the Rezidor Hotel Group's Russian SAS Radisson hotels.He said he believed that the hotel was required to quote its prices in rubles. Other businesspeople said they could use conditional units. The confusion stems from two separate pieces of legislation: the Law on Protection of Consumer Rights, which states that the price of goods and services must be displayed in rubles, and Article 317 of the Civil Code, which allows parties to agree on prices in conditional units as long as the payment is in rubles. Travel agencies, for one, have never fully switched to rubles."Airline tickets are still linked to foreign currency, even though these are tickets sold in Russia," Orlova said. "This means there is clearly a way to recalculate all prices on a daily basis based on a foreign currency."All International Air Transport Association members fix prices at an international exchange rate set by IATA every Wednesday. This week's rate is 43.5 rubles per euro. The government has long pushed for the demise of the conditional unit. Critics of the conditional unit, such as State Duma Deputy Valery Galchenko, have labeled the use of the measurement unpatriotic, and then-President Vladimir Putin issued a decree in March 2006 forbidding state officials from quoting prices in currencies other than rubles.Oleg Zamulin, assistant professor at the New Economic School, said companies are unlikely to flock to the conditional unit because it would be disadvantageous for them to switch currency rates individually when competitors are still using ruble rates.Entire industries switching to the conditional unit would take years, Zamulin said."It took a long time for companies to switch from using conditional units, and it will take a long time for them to switch back," he said.

Central Bank Sets Bottom For Ruble

The Central Bank sought to put a limit on the ruble's gradual slide on Thursday, setting its floor 10 percent below current levels after the currency stabilized in recent sessions.The Central Bank said it would stop widening the ruble trading corridor from Friday -- a process that cut nearly a fifth off the currency's value since November -- and would switch to a managed float.The statement ended a two-month long period of creeping devaluation as the government strove to bring the currency in line with weak oil prices and an economy that it expects to slip into its first recession in a decade this year."From Jan. 23, 2009, the upper boundary of the technical corridor will be set at 41 rubles" versus a euro/dollar basket, the Central Bank said in a statement."The stated value is defined taking into account the remaining risks of worsening terms of trade for the Russian Federation, but the Bank of Russia sees these risks as moderate and does not plan to change this boundary in the coming months," it said.The move comes after Russian officials noted that the depreciation could be coming to an end and after the ruble began to show its first signs of resilience. On Tuesday, it posted its biggest-ever rally versus the basket, and on Thursday it closed at 37.03 -- some way off the Central Bank's weakest boundary."It is a sensible move. They had been very keen to avoid a sudden devaluation for political reasons, so we have this instead," said Nigel Rendell, emerging foreign exchange strategist at Royal Bank of Canada in London."A lot of people have been short on the ruble for a long time, and they might decide the game is up and close their positions so there might be some short-term support," he said. "But the longer-term trend is clearly down unless we get some kind of inversion in the oil price."The Central Bank argues that the softly-softly approach to devaluation has avoided panic among a population that remembers the ruble losing more than two-thirds of its value during the 1998 financial crisis.Prime Minister Vladimir Putin this week ordered that the 2009 budget be reworked at an average price for key export oil of $41, less than half the originally forecast $95.That would mean an economic contraction of 0.2 percent this year, according to updated Economy Ministry forecasts.However, falling imports -- as the domestic economy slows -- will likely keep the trade balance in surplus, giving the ruble some support.Many Kremlin watchers expect Putin to seek a return to his old job as president in 2012, though he himself has not declared an interest.Analysts say his chances of doing that hinge on the handling of the current financial crisis, with the ruble one key factor. But the announcement of a managed float is unlikely to silence the analysts who say controlling the ruble's depreciation -- which has cost a third of Russia's reserves since August -- is too expensive, and a one-off large move or even a free float are needed.Russia's reserves fell a record $30.3 billion in the week to Jan. 16, data on Thursday showed, slipping below the $400 billion mark for the first time since May 2007.

Ruble Claws Back After 2-Month Decline

The Central Bank widened the ruble's trading band on Wednesday for the third time in as many days, yet for the second straight day the currency gained against both the dollar and the euro as tax payment deadlines helped produce a ruble deficit. While authorities said the ruble was nearing the end of its two-month fall, analysts debated whether the currency's equilibrium would actually hold. The ruble closed at 37.17 against the dollar/euro basket on Wednesday, gaining 0.6 percent from Tuesday's 37.38 close. The currency strengthened from 32.97 to 32.77 against the dollar and from 42.64 to 42.21 against the euro. The deadline for VAT tax payments was Jan. 20, and companies will have to pay profit taxes Jan. 28, said Katya Malofeyeva, chief economist at Renaissance Capital. The domestic demand for rubles is likely tied to the two tax payments and may not continue once the period for the payments is over, she said. "Global markets saw a heavy downward correction yesterday, and that's something that affects oil outlook and the ruble's outlook as well," Malofeyeva said. Kremlin economic adviser Arkady Dvorkovich said Tuesday that the ruble was near to reaching its equilibrium level. The same day, the Finance Ministry agreed to base the federal budget on the price of oil at $41 per barrel, a calculation that assumes the ruble will average at 41.40 to the dollar/euro basket. Finance Minister Alexei Kudrin also projected a positive ruble forecast at a financial forum in Hong Kong this week. The coincidence of the ruble's stability and the Kremlin's announcements imply that the state might have the currency's balancing point in sight, said Mikhail Galkin, head of fixed income research at MDM Bank. "In November, the authorities apparently did their math, correctly assuming a further slide in the oil price, and decided to move to a new level of exchange rate that would be better balancing external trade and the budget," Galkin said. "It looks like they are approaching the level they wanted, and they are orchestrating a stop in devaluation by creating a deficit of rubles and sending signals through verbal interventions -- like what Arkady Dvorkovich said," he said. The Central Bank helped spur the deficit by offering an unusually low sum of 80 billion rubles ($2.4 billion) at its deposit auction this week, he added. Still, Malofeyeva said, the Central Bank may simply be trying to throw off currency speculators who have profited from betting on the ruble's decline. The ruble has lost 29 percent of its value against the dollar since August and has been allowed devalue eight times this year by the Central Bank at a rate of about 2 percent per devaluation. Speculators have also benefited from the money the Central Bank has injected into the national banking system, a figure equal to about 2 trillion rubles (almost $60 billion), said Natalya Orlova, chief economist at Alfa Bank. "If the Central Bank reduces support to the banking sector, we can expect the ruble to appreciate. If the Central Bank continues to provide short-term ruble liquidity, then I think the chance of appreciation is low," Orlova said. Galkin of MDM said there was no chance the Central Bank had intervened to prop up the ruble on Tuesday and that there was a greater chance the bank intervened to buy currency -- not sell it -- on Wednesday. "The ruble is not a one-way story anymore, at least for the moment, and the regime is more looking like a controlled free-float," Galkin said. Orlova dismissed the idea that the Central Bank would actually switch to a managed float, where the bank would intervene with the currency only when absolutely necessary. This sort of "dirty float" could cost the state household stability, Orlova said. "People are becoming less secure about the value of their savings and their revenues. Switching to this dirty float in the current environment would exert even more pressure on consumption and on savings," Orlova said.

Ukraine's Parliament Urges Top Banker's Dismissal

KIEV, Ukraine -- The Ukrainian parliament on Friday demanded the central bank chief be dismissed over the collapse of the national currency, accusing him of corruption and incompetence.
National Bank chief Volodymyr Stelmakh has denied having any hand in the exchange market speculations that caused the hryvna to lose half its value against the dollar last week.President Viktor Yushchenko is expected to ignore the nonbinding motion for Stelmakh to be fired. The motion was spearheaded by Yushchenko's rival, Prime Minister Yulia Tymoshenko, who has accused the central banker of conspiring with banks over the currency speculations and pocketing profits.Yushchenko has said the country needs the expertise of Stelmakh, his longtime associate, to weather the current financial crisis. The currency devaluation coincided with a drastic fall in steel exports, leading to a foreign currency squeeze.In the meantime, the Ukrainian currency has recovered some of last week's losses, which took it to 9.6 to the U.S. dollar from its September rate of 4.9 to the dollar.At the close of trading Friday, the hryvna was listed at 7.6 to the dollar, thanks to the National Bank's efforts to prop up the rate by selling hard currency.Tymoshenko has claimed Yushchenko was involved in the alleged corruption schemes.The president has dismissed the allegation, and his top aide this week accused Tymoshenko of seeking to take control of the National Bank for personal gains.Ukraine is sinking into a deep recession, with the economy expected to shrink up to 10 percent early next year, according to Yushchenko's estimates.Industrial output has fallen nearly 30 percent, as global demand for steel, the heart of the economy, halved.

Why Putin will regret his pronoucments

Prime Minister Vladimir Putin became yet another high-ranking Russian civil servant to admit that an economic crisis exists in the country. He did this loudly and solemnly at a congress of the party of power. And having promised that there would not be a repeat of the 1998 collapse, he took personal responsibility for the social impact of the crisis, which even such a mighty national leader doesn’t have the power to prevent.
Unlike President Dmitri Medvedev’s statement, which confessed that 2009 would be a hard year for Russians, or the interview with Minister of Economic Development Elvira Nabiullina, which acknowledged the breakdown of the Russian economic model from Putin’s time [in office], Putin’s performance was liberally replayed on national television. Russians will remember precisely two of his excerpts, that a crisis exists, and that there won’t be any social impact. They will be remembered when the numbers at currency exchanges start to traitorously turn to favor the bourgeois and vanishing dollar. They will astonish yet another laid-off employee, when he cannot find a new job, and discovers that the government which promised to help him can do nothing for its citizen. Precisely these words will be quoted, when yet another strategic enterprise, or more importantly, a city’s major employer ceases operations, sending its workers overboard…
One can list such possibilities to remember Vladimir Putin’s words endlessly. Something else is more important: from the simple, popular point of view, these were the most important words of his political career. The public remembers well that Boris Yeltsin promised to lie down across the rails if prices grew, and then didn’t lie down. He promised that there would be no default, and then there was a default. But before these unkept promises, Yeltsin had a large and turbulent political biography under his belt: the anticipation of changes, that amazing air of freedom which today is already difficult to feel in Russia’s twilight (incidentally, the air becomes so thin during crisis years, that it sometimes seems fresh). And for Putin -years of assurances of stability, ending in admitting a crisis. That is why the Russian national memory won’t put President Putin together with stability, the fight with America and a glamorized Rublevka. There will only be Prime Minister Putin, who didn’t protect the country and her residents from a fiasco.
But could he have kept silent about all this? Probably, since no one was making him or his speech-writers speak up. In general, that’s how a public official differs from a televised underling. He tells the people the truth, which is sometimes bitter. Especially since Vladimir Putin doesn’t need to be elected anywhere, anytime soon. Or am I mistaken? But having been created by television, these people only believe their receivers. They believe that if you say that there's no crisis,it won't happen. They believe that if you say a crisis exists, but there won’t be an impact, then there won’t be.
Today’s elite, which had its hand held as it was brought into power, which never had to fight with anyone for it, which confused the government with a corporation and is incapable of a simple analysis of the situation six months ahead, much less of making strategic decisions, believes in an a remarkable manner in the power of the word, not of the action. Of the televised word. Appearing before a carefully arranged audience, that’s precisely why Vladimir Putin delivered what may end up being the most important and sole remembered speech of his future biography.

Ukraine Currency Strengthens On Hopes Of IMF Loan

KIEV, Ukraine -- Ukraine's battered currency rose Thursday, partly on hopes the country could secure a hefty International Monetary Fund loan to overcome a severe financial crisis.
The market responded to Parliament's approval Wednesday of a series of stabilization bills, required by the IMF to receive the $16.5 billion loan.Parliament must still approve the bills in a final reading Friday, after which the IMF would have to approve the aid package.The Ukrainian economy, which grew strongly over the past four years, has been one of hardest-hit by the global crisis among emerging markets, and experts predict a recession next year.The global credit crunch, coupled with problems at a key bank prompted a run on banks that cleared the system of $3.4 billion this month.The hryvna closed at 6.15-6.25 to the U.S. dollar on the foreign currency exchange, according to the Inter Business Consulting agency, after reaching a record low of 7.2 to the dollar the day before. The currency has lost about a quarter of its value since the beginning of the year.Currency traders also reacted to the National Bank's offer to sell dollars to all players at close to the market rate. That, combined with a more transparent policy on the foreign currency market, had been a key demand of the IMF."This is a very positive dynamic," said Iryna Piontkivska, an analyst with Troika Dialog Ukraine. "The market has to believe that the National Bank is really doing this."