Premier Wants Bank Chief Fired In Ukraine

Ukrainian Prime Minister Yulia Tymoshenko called on Thursday for the resignation of Central Bank Chairman Volodymyr Stelmakh, blaming the bank for the hryvna currency's fall to historic lows against the dollar.

The demand came as 1,000 angry Ukrainians rallied in Kiev, protesting price increases, wage delays, utility cutoffs and other effects of the economic crisis.

"I demand that the president of Ukraine put forward urgently a proposal [to parliament] to dismiss the head of the Central Bank and to remove the entire executive of the bank," Tymoshenko told a news conference.

The hryvna, meanwhile, gained slightly after a record two-day plunge, following a statement from the Central Bank calling a rate above 9 per dollar "unacceptable."

The currency fell 1.7 percent to 9.10 per dollar by 6:28 p.m. in Kiev. It pared an earlier 18 percent two-day drop to a record 9.78 after the Central Bank sold reserves to support the currency. Petro Poroshenko, head of the Central Bank council, said at a news conference that a weak hryvna is a threat to the economy.

"The Central Bank did say they would intervene at 8.95 Thursday, so it looks like they went ahead with it," said Dmitry Gourov, an economist focusing on Ukraine at UniCredit in Vienna. "The question is how big is their war chest, and given the limited amount of reserves they have to spend, there's not much room left."

President Viktor Yushchenko earlier tried to stem the drop, saying Ukraine will buy hryvna and calling for licenses to be revoked for lenders found speculating against the currency. The Central Bank said it would raise its benchmark refinancing rate from 12 percent to an unspecified level.

The Central Bank has attempted to manage the hryvna's decline since October by buying and selling foreign-exchange reserves. Natsionalnyi Bank Ukrainy drained $3.4 billion in November and $4.1 billion in the previous month, reducing them to $32.7 billion on Nov. 30.

Poroshenko said Thursday that the Central Bank still has sufficient foreign currency reserves to stabilize the hryvna.

Ukraine is attempting to arrest a deepening crisis since the International Monetary Fund provided a $16.4 billion bailout last month as the falling currency increases the cost of more than half of loans from domestic lenders that are in dollars, according to Central Bank data.

With $105 billion of corporate and state debt, Ukraine has the third-highest credit risk worldwide after Ecuador, which defaulted last week, and Argentina, based on the cost of credit-default swaps.

An exchange rate near 9 per dollar means 60 percent of foreign-currency loans and mortgages may not be repaid, Roman Zhukovskyi, head of the social and economic department in the president's office, said in a televised news conference in Kiev on Wednesday.

The country's woes have been exacerbated by the collapse of the ruling coalition in September amid disagreement between Prime Minister Yulia Tymoshenko and the president. The coalition was re-formed this month.

(Bloomberg, AP, Reuters)