Ukraine’s central bank has hiked its benchmark lending rate for the first time in eight months amid an escalating confrontation with pro-Russian activists.
The central bank raised the discount rate from 6.5% to 9.5% late Monday, a move that should help support the country’s floundering currency and curb inflation.
Ukraine’s currency, the hryvnia, has lost more than a third of its value against the U.S. dollar since Jan. 1, complicating efforts to stabilize the country’s economy.
Exports have declined dramatically as the country’s new government tries to avoid collapse, and foreign exchange reserves are down sharply.
The International Monetary Fund has approved an $18 billion loan for Ukraine, but its not clear the action will calm investors unnerved by a widening conflict between Kiev and Moscow.
Ukraine and Western nations are accusing Russia of deliberately trying to destabilize parts of eastern Ukraine ahead of national elections in late May. Russia’s foreign minister Sergey Lavrov has denied that Russian forces were active in the east.
Protesters forced police officers out of their four-story headquarters in the eastern Ukrainian city of Horlivka on Monday, extending gains made by demonstrators.
Kiev has responded with ultimatums that have demanded the pro-Russian activists give up, but its calls have been ignored.
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