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. Last Updated: 07/27/2016

Ukraine Central Bank Plans Steps to Prop Up Currency

KIEV -- Ukraine's central bank plans a series of measures to prop up the national currency, the hryvna, which has shown recent signs of potential collapse.


"Serious measures will be taken to stabilize the hryvna," National Bank spokesman Dmytro Rikberg said Thursday. "We are sure that they will have positive results."


Last year's introduction of the hryvna marked the end of inflation that had ravaged the economy, and its stability has been a diamond among the rhinestones of Ukraine's patchy reform efforts.


The stable hryvna has cheered Ukrainians who remember carrying worthless wads of the former currency amid hyperinflation in 1993 and has soothed foreigners with money in government treasury bills.


Now the hryvna has begun to tarnish, pressured by recent worldwide market turmoil and economic fragility caused by Ukraine's sluggish reform pace.


For more than a week, the central bank has pumped dollars into the official Kiev currency market, where hryvna demand has dried up and disappeared. On Thursday, the bank held the rate steady at 1.883 to the U.S. dollar.


But among commercial banks the hryvna was traded around 1.97 to the dollar Thursday, its second day outside the band set by the central bank, which has pledged to keep it between 1.7 and 1.9 through year's end.


With anti-reform forces and other foes of President Leonid Kuchma threatening to gain more power in parliamentary elections next March, the health of the hryvna is a top priority for the government.


Some Ukrainian bankers said they were confident the central bank could avoid a currency collapse, but other experts doubt the bank has enough hard currency reserves to hold up the hryvna for long. Those fears could keep foreigners out of the treasury bill market, where they held half of the $4 million in outstanding bills before currency worries sparked nervous selling.