Ukraine's Economy Is Nearing Collapse:
"It almost seems unfair to burden a country with so many problems, but while the attention of Ukraine’s government has been focused on thwarting Russian efforts to destabilize the east the economy has continued to deteriorate rapidly. In a desperate effort to head off inflation (which in March alone was over 3%) and protect the value of the Hryvnia, the Ukrainian central bank hiked its main interest rate from 6.5 to 9.5%. As reported by Bloomberg, the central bank also raised its overnight rate on refinancing loans secured with Ukrainian state securities to 14.5 percent from 7.5 percent and its rate on overnight certificates of deposit to 4.5 percent from 1.5 percent.
While these rate hikes did have some immediate impact (the Hryvnia rose about 8% against the dollar) the longer term implications are much more uncertain. What seems clear is that Ukraine just undertook a very significant amount of monetary tightening in an economy that is reeling (2014 growth had been optimistically forecast at around -3%). While the Hryvnia might temporarily strengthen, the simple fact is that Ukraine’s already terrible economic outlook just got that much worse."
'via Blog this'
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