LONDON Feb 17 Ukraine's hryvnia and dollar bonds briefly rose on Monday after opposition protesters ended a two-month occupation of Kiev's city hall, and emerging market stocks hit a 3-1/2-week high after upbeat Chinese lending data.
The Ukrainian currency rose 0.8 percent to 8.7 per dollar but quickly erased its gains, while dollar sovereign bonds rose across the curve.
The market may see renewed pressure because from Monday Ukraine's importers are allowed to buy dollars again after a six-day ban.
"The National bank of Ukraine is running out of foreign exchange reserves so it's inevitable for the currency to fall," Neil Shearing, chief emerging market economist at Capital Economics, said.
"The question is whether we see managed devaluation, to about 10-11 to the dollar, or messy and disorderly adjustment. In times of crisis, the currency tends to overshoot."
The central bank spent about 8 percent of its reserves on currency intervention in January alone, leaving them at $18 billion, an eight-year low.
That is enough to cover roughly two months of imports - raising the possibility the bank will run out of ammunition unless it gets external support.
Emerging market currencies were broadly steady to higher after data showed Chinese banks made 1.32 trillion yuan ($218 billion) of new yuan loans in January, the most for four years .
The data suggested the world's second-largest economy may not be cooling as much as some fear and helped send Shanghai shares to a two-month high. Expectations that the Federal Reserve would disrupt its gradual pace of monetary stimulus withdrawal also helped stabilise sentiment.
"(Chinese data) was obviously strong which is good for near-term growth. More generally, the market has taken a more sanguine view of Fed tapering," Capital Economics' Shearing said. "For now the market seems to have settled down."
The focus will be on monetary policy meetings in Hungary and Turkey, both due on Tuesday, dealers said.
Hungary's central bank is expected to cut interest rates again after pushing them to a record low of 2.85 percent, but some say it may switch to a more cautious tone or even halt rate cuts after a broad emerging market rout.
The forint was steady at 308.58 per euro.
The Turkish lira eased slightly to 2.18 per dollar ahead of the monetary policy meeting where the central bank is expected to keep rates on hold after aggressive hikes at an emergency meeting in January.
Volume is likely to be thin with U.S. markets shut for a holiday.
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