Fitch Ratings has downgraded
According to the agency, political instability has increased significantly since Fitch's last rating review on
The government reaction to the protests has weakened its popular legitimacy and put diplomatic ties under pressure. PM
Fitch notes that sovereign access to external financing and its ability to refinance a significant external debt repayment schedule, have worsened. In addition,
Political turmoil in the country has added to a weakening in confidence in the Ukrainian hryvnia and in the exchange rate policy.
The NBU has decided to impose temporary rules for stabilization of the currency market. The rules are aimed at strengthening of control and transparency of interbank operations of legal persons. Following the situation on the currency market stabilizes, those measures will be abolished. In particular, the NBU has imposed a temporal ban on sale of foreign currency at the interbank forex market for early redemption of loans, investments abroad, and also for insurers' partly covering actuarial reserves.
The resolution also supposes setting zero rate of funds reservation under the banks' contracts on raising funds in foreign currency from non-residents for the term of up to 183 running days. The NBU underlines, the measures stipulated in Resolution 49 are required to ensure stability of the hryvnia, protection of depositors' interests, and maintaining price stability. These developments pose liquidity and asset quality risks, given the large amounts of foreign currency debt on private sector balance sheets, Fitch sums up.
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