Ukraine: Central Bank Bans, then Lifts Ban on Foreign Currency Purchases

The Ukrainian central bank began to severely restrict access to foreign currencies on Wednesday in an attempt to curb a sharp drop in the hryvnia, and then rapidly changed course, lifting the ban on foreign currency purchases. Ukraine’s economy has worsened due to infighting over legislation in the Ukrainian parliament and the related inability to obtain bailout funds as a result.

Despite the rapid devaluation of the currency, the fact that the ceasefire negotiated by the Ukrainian army and rebel forces in eastern Ukraine appears to have gained momentum, providing cause for optimism. One of the main reasons why the truce had initially been reported as a failure was that shelling had continued in both directions near eastern Ukrainian cities. Recent reports have shown no causalities and indicate that the shelling has ceased.

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News Briefs:

  • The European Union has begun to engage with Azerbaijan and Turkmenistan in an effort to reduce its current dependence on Russian natural gas. EU officials are expected to publish a document stating their intention to pledge all available resources to “alternative suppliers,” including Azerbaijan and Turkmenistan. The EU currently imports 27% of its natural gas from Russia.
  • The Tajik parliament ratified an agreement made with the Asian Development Bank to install electricity meters and approximately 1,800 electric power transformers. The agreement reached stipulates that the project will be funded largely by a 54 million dollar grant from the ADB, while the remaining 13 million are to be provided by the Tajik government.  The ADB currently funds 430 million dollars’ worth of energy projects within Tajikistan.
  • Turquoise Hill Resources announced that it will liquidate its 22% stake in SouthGobi Resources Ltd., a large Canadian mining company with significant investments within Mongolia. The sale will be made to another, seemingly Chinese investment firm known as Novel Sunrise Investments. The move comes as SouthGobi has come under fire due to the conviction of three of its employees on charges of tax evasion.
  • Recurring disputes over pricing between Ukraine and Russia have culminated in Russia’s Gazprom threatening to shut off natural gas supplies to Ukraine. The dispute arose after officials representing Ukraine’s Naftogaz alleged that Gazprom was not delivering previously agreed upon quantities of natural gas, leading to smaller payments from Kiev. Ukraine currently relies on Russia for 55% of its natural gas.
  • Germany announced that it will grant 38 million euros to Kyrgyzstan in order to further bilateral cooperation. The funds have been divided up, with 23 million of them intended to assist in financing joint “financial cooperation projects,” and the remainder destined to sustainable economic development and vocational education projects.
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