© Reuters. FILE PHOTO: Ukrainian hryvnia banknotes are seen in a photograph illustration shot in Kiev, Ukraine, August 6, 2014. REUTERS/Konstantin Chernichkin/Ullustration
By Natalia Zinets
KYIV (Reuters) -Ukraine’s property got here underneath strain on Tuesday after a pointy escalation of tensions with Russia, sending the hryvnia tumbling to ranges final seen in 2015 when the nation was headed for default.
Russia’s formal recognition of two breakaway areas in jap Ukraine late on Monday has raised the spectre of struggle on Europe’s jap flank and rattled international monetary markets.
Ukraine’s hryvnia weakened as a lot as 1.4% to 29.1196 to the greenback – its weakest degree for the reason that foreign money dropped sharply in 2015 because the nation hurtled in direction of a debt restructuring.
The foreign money has weakened practically 10% since end-October, when the battle with Moscow intensified as traders ditched Ukrainian property amid rising considerations over a Russian troop buildup close to Ukraine’s borders and fears Russia is making ready for a navy assault in opposition to Ukraine. The Kremlin has denied that.
Ukraine’s dollar-denominated sovereign bonds additionally stumbled.
Its 2032 bond dropped 2 cents within the greenback to commerce at a report low of 71.694 cents, Tradeweb information confirmed. Ukraine’s 2040 GDP-linked bond slipped greater than 3 cents to commerce at 58.303 cents, having misplaced round half its worth since June final 12 months.
Dennis Shen at Scope Scores in Berlin stated an extra escalation might strain Ukraine’s credit standing.
“There may be nonetheless plenty of out there situations, together with these observing de-escalation so long as negotiations proceed,” Shen stated in emailed feedback. “Nonetheless, such situations have narrowed in view of Russia’s most up-to-date actions.”
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