Reuters blog archive
from Global Investing:
The latest data from Ukraine shows its hard currency reserves fell $2 billion over November to $18.9 billion. That's perilously low by any measure. (Check out this graphic showing how poorly Ukraine's reserve adequacy ratios compare with other emerging markets: http://link.reuters.com/quq25v)
Central banks often have tricks to temporarily boost reserves, or at least, to give the impression that they are doing so. Turkey, for instance, allows commercial banks to keep some of their lira reserve requirements in hard currency and gold. Others may get friendly foreign central banks to deposit some cash. Yet another ploy is to issue T-bills in hard currency to mop up banks' cash holdings. But it may be hard for Ukraine to do any of this says Exotix economist Gabriel Sterne, who has compared the Ukraine national bank's plight with that of Egypt.
Ukraine and Egypt have both balked at signing up to IMF loan programmes because these would require them to cut back on subsidies. But latest data shows Egypt's reserves have risen to $17.8 billion from just over $10 billion in July, while Ukraine's have declined from $22.9 billion. Egyptian import cover has also risen to 2.6 months while Ukraine now has enough cash to fund less than 2 months of imports (Back in July it was 3 months)
In Egypt, there is more scope for authorities to issue dollar T-bills to mop up dollars. But Ukrainian commercial banks' net foreign assets are negative, in contrast with Egypt.
from Global Investing:
The fate of Ukraine's hryvnia currency hangs by a thread. Will that thread break?
The hryvnia's crawling peg has so far held as the central bank has dipped steadily into its reserves to support it. But the reserves are dwindling and political unrest is growing. Forwards markets are therefore betting on quite a sizeable depreciation (See graphic below from brokerage Exotix).
No sign of tensions calming on the streets of Kiev, in fact today we could have a new flashpoint.
Prime Minister Mykola Azarov's cabinet is holding its weekly meeting in the government building which protesters have blockaded since Monday, paving the way for a possible showdown.
from John Lloyd:
President Viktor Yanukovich of Ukraine must have thought he was opting for an easier life when he decided last week to renege on his decision to sign an Association Agreement with the European Union. Staying connected to the Russian-dominated former Soviet Union had seemed a better choice. Ukraine is the second-largest Slavic-Orthodox state after Russia, and Russians have long looked to Kiev for the eleventh-century origins of their state and religion.
The late American scholar Samuel Huntington called the former Soviet Union, with some other Eastern Slavic states, an “Orthodox civilization.” President Yanukovich must have thought he had avoided a clash with the West, which is, in Huntington’s view, quite a different civilization.
Ukraine continues to top the European worry list.
Monday demonstrated how quickly the financial side of the equation can spiral out of control. The hryvnia currency slumped and the cost of insuring against Ukrainian default soared, forcing the central bank to intervene and urge its citizens not to spark a bank run.
Having turned its back on the EU, Kiev must find more than $17 billion next year to meet gas bills and debt repayments. Presumably Russia will have to help out if it is not to have a basket case on its doorstep.
Ukraine’s shock decision to turn its back on an EU trade deal continues to reverberate with mass rallies on the streets of Kiev in protest at President Viktor Yanukovich’s decision.
To try to defuse tensions, Yanukovich issued a statement saying he would do everything in his power to speed up Ukrainian moves toward the EU. Is this another U-turn or mere semantics? The answer is important.
The bombardment of European Central Bank interventions continues today. ECB chief Mario Draghi addresses the European Banking Congress in Frankfurt and any number of his colleagues break cover elsewhere.
Draghi shepherded a surprise interest rate cut earlier this month and consistently says that other options are on the table though yesterday he said that talk of cutting the deposit rate into negative territory to try and force banks to lend more was people “creating their own dreams”.
The decision by one of Silvio Berlusconi's key allies to break from his party and back Prime Minister Enrico Letta's fragile coalition appears to have shored up the Italian government with a final vote on expelling the media magnate from public life looming large.
Berlusconi said on Saturday his rump centre-right party had split from the coalition but did not have the numbers to bring it down.
Angelino Alfano, interior minister and deputy premier, said all five of the centre-right ministers under his umbrella would stay in the government but there is still plenty of disagreement within the coalition about the 2014 budget and doubts about Letta’s ability to push through meaningful economic reforms.
from Global Investing:
The course is more than 20 million square kilometers, and covers 15 percent of the world's land surface. It's not a new event in next month's IAAF World Championships in Moscow but a long-term project to better integrate emerging Eurasian economies.
The eventual aim of a new economic union for post-Soviet states, known as the Eurasian Economic Union (EEU), is to "substitute previously existing ones," according to Tatiana Valovaya, Russia's minister in charge of development of integration and macroeconomics, at a media briefing in London last week.
from Photographers' Blog:
By Gleb Garanich
Let me introduce you to the famous open-air “Sweat Gym” composed of around 200 work-out machines assembled from scrap iron to train all muscles. It is laid out on an island in the Dnieper river off Kiev.
I am not a sports fan, only learning about this place by accident. I thought it could make an interesting story and so I went to take pictures of the “Sweat Gym”. I was so struck by the uncanny scene that unfolded in front of me, that for the first half an hour I slowly roamed and looked around as if examining rare exhibits in a museum. Unknown gear, machines, intricate contraptions, old chains, wheels and tires, parts of caterpillar tracks and simple chunks of rusty metal – with humans swarming amid it all.