Ukraine’s Hryvnia Drops To Two-Year Low On Europe Crisis Concern

KIEV, Ukraine -- The hryvnia depreciated for a seventh day against the dollar, poised for its longest losing streak since December 2008, on speculation uncertainty about Europe’s debt crisis is damping demand for the country’s debt.

500 Hryvnia ~ $62.00

The Ukrainian currency lost 0.7 percent to 8.11 per dollar as of 10:46 a.m. in the capital, Kiev, heading for the weakest closing level since February 2010.

The former Soviet republic’s $1 billion of dollar-denominated debt due November 2016 fell for the first time in three days, increasing the yield by three basis points, or 0.03 percentage point, to 9.47 percent.

European leaders are meeting in Brussels today to discuss the region’s debt crisis that has wiped more than $4 trillion from equity markets worldwide this month.

The yield spread on Ukrainian bonds over the emerging-market average has jumped 10 basis points this month to 466 basis points.

“Non-residents cut their share in Ukraine’s treasury bills last week from 4.2 billion hryvnia ($0.52 billion) to 3.2 billion hryvnia ($0.40 billion) as the government repaid some debt,” Vladislav Sochinsky, treasurer at Citigroup Inc.’s Ukrainian unit, said by phone.

“They did not reinvest, but converted the hryvnia into dollars because concerns over the euro-zone crisis strengthened while expectations for global economic growth worsened.”

Sochinsky predicts the hryvnia will rally over the next few days.

Source: Bloomberg