February 28, 2014
By Natalia Zinets and Sabina Zawadzki
The bank also banned non-deliverable forward contracts in the currency market.
Dealers said the hryvnia was trading around 9.80-10.10 to the dollar after weakening as far as 11.20-10.10 on Thursday.
Central Bank governor Stepan Kubiv said on Friday depositors of foreign currencies would be limited to withdrawals equivalent to 15,000 hryvnia a day, or around $1,500.
He also said central bank staff would look into the trading of 16 unnamed banks to see whether they had illegally speculated in their currency trade operations.
“It was all speculation and the moment the market felt a peak (in the dollar), offers (of the dollar) started to appear,” said one dealer.
Dealers said activity in the non-deliverable forwards market usually rises during times of volatility. The central bank did not give data on the forwards market or say how large a market it is.
Investors have been concerned about Ukraine’s ability to repay its sovereign debts after upheaval that has removed from power President Viktor Yanukovich and raised doubts about a $15 billion life-line from Russia.
Ukraine’s 2017 dollar bond was trading at 92.7 percent of its face value, up 1 point on the day. Most other issues also rose slightly on the day.
State energy firm Naftogaz’s dollar bond due Sept 2014 fell 1 point however, possibly reflecting fears that some short-dated bonds may have to be rescheduled.
Earlier, Prime Minister Arseny Yatseniuk said Ukraine hoped to begin receiving international financial aid soon and was determined to fulfill conditions needed to secure support from the International Monetary Fund (IMF).
“It seems like some emergency funding will be made available and that will sustain Ukraine for the immediate period. The national bank putting curbs on some deposit withdrawals may also have had an impact,” said Neil Shearing, head of EM research at Capital Economics in London.
“But the hryvnia probably needs to weaken further towards 11 per dollar to put the balance of payments picture on a more sustainable footing.”
Ukraine’s new leaders have said the heavily indebted country needs at least $35 billion to stave off bankruptcy.