UPDATE 1-Russia to buy $2 bln worth of Ukrainian eurobonds this week

Mon Feb 17, 2014 1:43pm EST

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By Darya Korsunskaya

CHEREPOVETS, Russia Feb 17 (Reuters) - Russia will buy $2 billion of Ukrainian eurobonds this week, Russian Finance Minister Anton Siluanov said on Monday, in a move that may bolster Ukraine's president and the country's struggling currency.

The purchase will be the second tranche of a $15-billion loan plan agreed in December between Russian President Vladimir Putin and Ukrainian President Viktor Yanukovich.

The Kremlin had put the credits on hold after the Ukrainian prime minister stepped down on Jan. 28 in an effort to appease anti-Yanukovich protesters. They have occupied central Kiev since November, when the president rejected a trade deal with the European Union and sought economic aid from Moscow instead.

Moscow had previously indicated it would wait until it was clear which government Yanukovich would appoint before lending more. Yanukovich has yet to name a new prime minister, however.

Russia had agreed on credits and cheaper gas for Kiev in December to help its fellow former Soviet republic meet huge debt payments, appearing to give Moscow the edge over Brussels in a tug-of-war for influence in Kiev.

Asked by journalists in Cherepovets, north of Moscow, when Russia planned to deliver a second tranche of loans, Siluanov replied: "This week." He confirmed that Russia would buy $2 billion in eurobonds.

The disbursement should help Ukraine's hryvnia. The currency has been under pressure since protests began. The central bank imposed capital controls on Feb. 7 after spending about 8 percent of its reserves in January defending the hyrvnia exchange rate.

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