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Ukrainian currency dives as cease-fire stalls

By
Ed Adamczyk
A 25 hryvnia coin (CC/ National Bank of Ukraine)
A 25 hryvnia coin (CC/ National Bank of Ukraine)

KIEV, Ukraine, Feb. 23 (UPI) -- Ukraine's currency sunk to a record low Monday, as pessimism over a cease-fire in eastern Ukraine prompted doubt about the country's economic potential.

The value of the Ukrainian hryvnia dropped 10 percent in a single day against the U.S. dollar Monday, and is now worth less than four U.S. cents. The currency fell 46 percent in February, and 71 percent in the past year.

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The decline makes purchases, including those of energy and military equipment, more costly, and makes any imported product more expensive. The Ukrainian Central Bank announced new measures Monday, including a limit to businesses' ability to buy foreign currency, to prop up the hryvnia.

The fall of the hryvnia also makes repayment of Ukraine's foreign loans more difficult, and with government reserves of foreign currency quickly declining, analysts suspect the country may soon go bankrupt.

The lack of confidence stems from the slow action surrounding the Feb. 12 cease-fire. Fighting, and victory by pro-Russian separatists, continued in the strategic transportation town of Debaltseve after the cease-fire began. A prisoner exchange, called for in the agreement, only began over the weekend, and a mutual pullback of heavy artillery was postponed, the Ukrainian military said, until separatists stopped shelling of army positions. The separatists announced their own withdrawal of artillery would begin Tuesday.

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