Ukraine To Be Seriously Affected In Case Of US Default, Says Tihypko

KIEV, Ukraine -- The pegging of the hryvnia to the dollar and the large share of payments in dollars in Ukraine's foreign trade may have grave consequences for Ukraine if U.S. politicians fail to reach an agreement on raising the country's debt ceiling, as the United States will have to default on its obligations, Ukraine's Vice Premier and Social Policy Minister Serhiy Tihypko has said.

Serhiy Tihypko

"If the Republicans and Democrats fail to agree, it will affect Ukraine: Half of the foreign currency reserves of the NBU in the country are in dollars, half of [Ukraine's] foreign trade is in dollars," he told reporters in Kiev on Wednesday.

"If a compromise is not found, Ukraine will feel it next day already: we have the hryvnia virtually pegged to the dollar, we may find ourselves in a very hard situation," the vice premier, who once governed the National Bank of Ukraine and lead the largest commercial bank of Ukraine.

"But I believe that a compromise will be reached," Tihypko said.

The U.S. Congress has to raise the limit on U.S. borrowing by August 2 otherwise the federal government will run out of money to pay its debts.

Source: Interfax