Ukranians Rush to Exchange Currency in Turbulent Times

The Ukrainian currency Hryvnia (UAH) has reached a five-year low, with UAH 9.1 trading for USD 1 on Thursday.

This is just under its record-low value of more than 10-1 of UAH-USD, which was registered in 2008.

Markets have expectedly shown a negative reaction to the violence in Kiev and other Ukrainian cities as the bloodshed began again on the streets of the capital.

The political turbulence has resulted in economic uncertainty, Russian agency ITAR-TASS reports.

Since November last year, many Ukrainians have exchanged their money for euro or dollars according to Mikhail Zadornov, president of the VTB 24 bank.

Favorable interests on deposit previously pushed Ukrainians to accumulate savings in Hryvnia. The protests put an abrupt end to their enthusiasm.

Zadornov, however, noted that instability is quite an old feature of the Ukrainian banking sector.

The government in Kiev made a desperate push to stop the exchange of foreign currency by restricting its purchase by the Central Bank of Ukraine.

The move does not yield more stability as financial problems emerged from another source. ITAR-TASS reported Thursday that the International Monetary Fund is putting on hold all negotiations with Ukraine until a new government is formed.

Russia has also announced it is freezing the payments on loans to Kiev until the political climate is brought to normal.

The Financial Times, on the other hand, has predicted a bleak financial future for East Europe as "the chaos unfolding in Kiev hit central and eastern European currencies on Wednesday".

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