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Ukraine currency falls again, economic collapse feared

The hryvnia is now at 26 to the U.S. dollar.

By Ed Adamczyk
Ukraine currency falls again, economic collapse feared
Detail on a 5 hryvnia bank note. CC/ National Bank of Ukraine

KIEV, Ukraine, Feb. 6 (UPI) -- A fall in the value of Ukraine's currency Friday added to fears the country is collapsing economically as its military is losing a battle with separatists. The hryvnia fell 11 percent Friday against the U.S. dollar, after falling over 20 percent after Thursday's decision of the National Bank of Ukraine to abandon a fixed exchange rate by cancelling foreign currency auctions.

The hryvnia traded Friday at about 26 to the dollar. It traded at 9.45 to the dollar on Dec. 17, and Ukraine's inflation rate in 2014 was 24.9 percent. The country remains dependent on foreign loans, and while French President François Hollande and German Chancellor Angela Merkel traveled to Moscow on Friday to seek an accord to end fighting in eastern Ukraine, Germany and France have made it clear they are reluctant to infuse the Ukrainian economy with more money.

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The political environment in Kiev remains clouded by corruption, something the administration that came to power in 2014 has done little to eradicate. Valeria Gontareva, the National Bank's governor, said Thursday to expect volatility in the hryvnia after the removal of the unofficial currency peg, adding Ukraine would welcome a new bailout arrangement with the International Monetary Fund, a move that would strengthen the currency.

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