World Economy

Ukraine Economic ‘Meltdown’ Worsening

Ukraine Economic ‘Meltdown’ WorseningUkraine Economic ‘Meltdown’ Worsening

Ukraine’s currency plunged to new record lows on Monday morning, as a failed peace plan and continued violence piled more pressure on a country that has seen a year of political and economic turmoil.

The country’s central bank said the official rate for the hryvnia had dropped 7 percent on Monday, to close to 30 against the US dollar, according to Reuters.

It came as the bank also announced currency controls for the country’s importers to try to limit the hryvnia’s fall. Ukrainian sovereign bonds also fell to record lows during the morning session.

“Let’s not beat around the bush – Ukraine is facing economic/financial meltdown,” Timothy Ash, head of emerging markets at Standard Bank, said in a morning note.

Over the weekend, the country marked the anniversary of the protests that sparked a change of power in Kiev. Tensions on the streets of the capital in 2014 soon turned into military conflicts on the eastern border, however, with Moscow accused of aiding pro-Kremlin rebels in the region. Moscow continues to deny the involvement of Russian troops in the conflict.

The US dollar has appreciated 200 percent against the Ukrainian currency in the twelve months that have passed since the start of the conflict, and the economy has crumbled. Figures last week revealed a more-than 15 percent fall in gross domestic product (GDP) year-on-year in the fourth quarter of 2014.

The International Monetary Fund (IMF) has introduced a new Extended Fund Facility for Ukraine, in addition to its existing aid package for the country. Ukraine has also received financial help from the US, the European Union and the World Bank.