Hryvnia Falls More Than Most Currencies In 2008

KIEV, Ukraine -- The national currencies of Ukraine and Iceland, both recent recipients of emergency lifeline loans from the International Monetary Fund, lost more value in 2008 than any other countries, the respected Russian business daily Vedomosti revealed in a Feb. 2 report citing figures provided by Bloomberg.
The report, entitled “Friends in Devaluation,” goes on to describe Russia’s currency, the ruble, as also being battered heavily last year.According to Kyiv-based investment bank Dragon Capital, the hryvnia has been under mounting depreciation pressure since September due to rapid deterioration in Ukraine’s balance of payments.“In addition to a sharp contraction in foreign demand and declining world commodity prices producing a strong negative impact on exports, Ukraine’s external position was undermined by evaporating access to foreign debt capital, on which the domestic private sector and banks had relied strongly in the previous several years having accumulated $83 billion, (48 percent of gross domestic product) of debt by the first half of 2008.“The hryvnia’s rapid slump made it one of the hardest hit emerging market currencies worldwide. However, the bottom may still be ahead. With foreign demand for Ukrainian export commodities staying weak and the domestic political situation remaining volatile, fueling uncertainty over near-term monetary and fiscal policies, we do not rule out new downswings in the exchange rate in coming months. Our 2009 exchange rate forecast actually accounts for new possible fluctuations, envisaging an end-2009 rate of Hr 8.5 relative to the United States dollar and a rate of Hr 9.5 on average for the year."