Ukraine's central bank almost doubles overnight rate

The hryvnia has lost about 38 percent of its value against the dollar since the beginning of the year due to the conflict with Russia.

Ukraine's central bank almost doubles overnight rate

World Bulletin/News Desk

Ukraine's central bank on Monday unexpectedly raised its overnight loan rate to 14.5 percent from 7.5 percent in an apparent attempt to restrict new money flows and prevent further pressure on the hryvnia currency.

The bank last changed the rate in August, when it cut the rate by 50 basis points. The hryvnia has lost about 38 percent of its value against the dollar since the beginning of the year due to the conflict with Russia.

The rate rise, announced without warning, takes effect from April 15, the bank's statement said.

The main interest rate - the discount rate - remains at 6.50 percent, where it has been since August.

The statement gave no reason for the move, but the head of the central bank's monetary policy department said in March an increase in the refinancing rate was being considered in order to prevent further deposit outflows from the banking system and to stave off a further weakening of the hryvnia.

The central bank said on Monday the country's banking system had lost 10 percent of hryvnia deposit volumes since the start of the year. Foreign currency deposits fell 14 percent, it said.

In an interview on the sidelines of the IMF-World Bank meetings in Washington on Sunday, National Bank of Ukraine Governor Stepan Kubiv said Kiev had started working on floating its currency, and planned to move to full inflation-targeting within 12 months.

Last Mod: 14 Nisan 2014, 22:49
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