Ukraine: Central Bank to Raise Refinancing Benchmark

The Ukrainian central bank will raise its benchmark refinancing rate to 30%, a more than 10% increase of the current rate of 19.5%. The bank taking this step has been expected, as inflation rates are increasing rapidly and the hryvnia has lost nearly half of its value during 2015. The move by the central bank is designed to curb inflation and slow the devaluation of the hryvynia, though the success of the maneuver is ultimately contingent on two principal factors.

The first of these factors is the tenuous cease fire currently in place between Ukrainian military and Russia-backed rebels in eastern Ukraine. If the deal fails to hold true, ongoing instability will likely impede the ability of organizations such as the International Monetary Fund to provide Ukraine with bailout funds.

The second of these factors is economic. If actions taken by the central bank do not have the intended effect, or if measures that require Ukrainian entities to sell 75% of their foreign currency reserves are not respected, the aforementioned economic problems could persist.

Follow us on Twitter: @SteppeDispatch

News Briefs:

  • Iran’s state-run Press TV announced that Iranian natural gas production is expected to hit one billion cubic meters per day by March of 2016. A senior Iranian official described Iran’s current capabilities as able to produce 660 million cubic meters a day in the immediate term, though exploration of largely untapped fields is expected to amplify Iranian production, according to the same official.
  • The Mongolian government has been ordered to pay a Canadian mining firm $100mn for cancelling already-granted uranium licenses. The judgment, handed down by an international arbitration tribunal, marks the end of a case opened by Khan Resources more than four years ago. The decision was rendered in accordance with previous offers made on Dornod, the uranium mine to which Khan had been granted mining rights.
  • Chinese investment in Kazakhstan has remained strong despite the economic downturn engendered by the Russian economic crisis. Kazakhstan is currently the destination of more Chinese FDI than in any other country in the former Soviet Union, with more than USD $20bn received since the collapse of the Soviet Union. The annual Kazakh-China investment forum, held in January, proved fortuitous for both sides.
  • Radio Free Europe has attributed a portion of the Tajik Islamic Renaissance Party’s defeat in recent elections to a lack of internal organization and a “general anti-Islamic mood” given recent occurrences in Syria. The political party, which received a paltry 1.5% of the vote in elections that were considered far from fair and imbued with corruption, still wouldn’t have likely had a shot at winning the elections, but receiving less than 2% nonetheless came as a surprise.
  • Officials from Turkmenistan and Turkey have reached new energy agreements that will also involve Azerbaijan, officials say. Turkish President Recep Tayyip Erdoğan announced the agreements, stating that the three countries will soon convene in Ashgabat to discuss further the specifics of the deal.
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s