UAH/US$: Depreciation Still In The Offing

The Ukrainian hryvnia continues to come under sustained downside pressure, highlighted by its recent fall to a multi-month low of UAH8.4380/US$ on August 24, a level not hit since early March 2009. While emergency financing from the IMF has hitherto provided the National Bank of Ukraine (NBU) with a sufficient financial arsenal in which to defend the currency, we believe the central bank's ability to continue supporting the unit through end-year is less than assured. Accordingly, we maintain our core view that the hryvnia will weaken further through the second half of 2009 towards an end-year target of UAH9.0000/US$.

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