The value of Ukraine’s currency, the hryvnia, increased on Monday after the country’s central bank raised its benchmark interest rate.
It boosted it from 6.5 percent to 9.5 percent. It was the first hike in eight months. The overnight interest rate was nearly doubled to 14.50 percent from 7.50 percent.
Analysts called the move – which is intended to support the weakening currency, curb inflation and calm money markets – mostly symbolic and said the further trend is unpredictable.
The hryvnia had risen eight percent against the dollar by midday Central European Time, but has a long way to go considering it has lost around a third of its value against the US currency this year.
The hryvnia has plunged in value due to the conflict with Russia, and in particular its annexation of Crimea last month.
The central bank’s ability to support the hryvnia by intervening to sell dollars is limited by tiny foreign currency reserves, which shrank to about $15 billion at the end of March.
Ukraine has to repay about $10 billion in external debts this year and needs several billion more to buy gas from Russia.