Top Ukraine Central Banker Resigns Amid Probe

KIEV, Ukraine -- A senior official at Ukraine's central bank resigned Friday, the latest development in a politically charged dispute over the financial regulator's policies during the financial crisis.

Oleskandr Savchenko

The move by Oleskandr Savchenko, deputy chairman of the National Bank, came a day after the Interior Ministry launched an investigation into allegations the bank misused funds earmarked to strengthen the national currency and banking sector.

His resignation in protest at the bank's alleged wrongdoing is viewed by experts as part of a larger political struggle between Prime Minister Yulia Tymoshenko and President Viktor Yushchenko ahead of January presidential elections.

Observers say the rancor has hampered efforts to ease the crisis.

Tymoshenko has long accused the National Bank, seen as controlled by its former head Yushchenko, of selling foreign currency at lower rates and providing financial assistance to friendly banks for kickbacks. The probe into the alleged wrongdoing was launched by her ally, Interior Ministry Yuriy Lutsenko.

Savchenko, also seen as a Tymoshenko ally, supported the premier's accusations against the bank Friday and said he was resigning in protest.

"All this leads to devaluation, inflation and people's disappointment with the national currency," Savchenko told a news conference.

"The National Bank of Ukraine is not an independent body," he said. "Unfortunately, it is involved in politics and sometimes - through certain schemes - in commerce."

The National Bank declined immediate comment.

The hryvna has fluctuated sharply in recent weeks due to growing political instability, debt problems at the state energy firm Naftogaz and warnings from the International Monetary fund that it might withhold the next installment of its $16.4 billion rescue loan.

Overall, the currency has lost about 45 percent of its value to the dollar since last fall, as steel and chemical exports plunged due to a fall in global demand and investors left emerging markets. The hryvna traded at 8.50 to the dollar on the foreign currency exchange Fri2ay, down from about 4.90 to the dollar a year ago.

Source: AP