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21 Feb 2014
Ukraine crisis: Opposition agrees to peace deal but situation still unstable
FXStreet (Łodź) - According to reports from the Polish foreign ministry officials, the peace deal struck today between Ukrainian President Viktor Yanukovich and Polish and German diplomats in Kiev and involving earlier elections in December this year, was accepted by the protest movement leaders.
Still, skepticism remains about the outcome of the talks. As Adam Button remarks “rebel groups can easily fracture, especially after so much blood has been spilled.”
The BBH Global Currency Strategy Team also believe the protesters might not be willing to comply if Yanukovich will be given the go ahead to run in the elections. They also point out that Ukraine's economic situation is rapidly deteriorating.
“Its external debt/GDP ratio is near 80%, while short-term debt/reserves ratio is almost 200%. To make things worse, Ukraine’s short-term debt + current account/reserves is a whopping 275%. Without further infusion of aid from Russia and/or the EU/IMF, Ukraine’s financial position will remain precarious. Orthodox means of supporting the currency are impossible, and so deeper capital controls are a risk if the political situation is not resolved.”
USD/UAH moved towards the 9.25 high today.
Still, skepticism remains about the outcome of the talks. As Adam Button remarks “rebel groups can easily fracture, especially after so much blood has been spilled.”
The BBH Global Currency Strategy Team also believe the protesters might not be willing to comply if Yanukovich will be given the go ahead to run in the elections. They also point out that Ukraine's economic situation is rapidly deteriorating.
“Its external debt/GDP ratio is near 80%, while short-term debt/reserves ratio is almost 200%. To make things worse, Ukraine’s short-term debt + current account/reserves is a whopping 275%. Without further infusion of aid from Russia and/or the EU/IMF, Ukraine’s financial position will remain precarious. Orthodox means of supporting the currency are impossible, and so deeper capital controls are a risk if the political situation is not resolved.”
USD/UAH moved towards the 9.25 high today.