* Says increases benchmark rate to 9.5 pct from 6.5 pct
* First change in rate since August
* Currency under pressure over Russia conflict
* Hryvnia lost 38 pct of value since start of year
(Updates with change to benchmark rate)
By Natalia Zinets
KIEV, April 14 Ukraine's central bank increased
its benchmark interest rate for the first time in eight months
on Monday in a bid to defend its currency which has lost almost
two-fifths of its value since the start of the year due to the
conflict with Russia.
The central bank hiked the benchmark rate to 9.5 percent
from 6.5 percent in its first change since August last year. The
rate change will go into force from Tuesday.
"The central bank considers it necessary to take the step to
increase the value of the national currency, to restrain
inflation and to stabilise the situation on the money market,"
the central bank said in a statement.
Earlier on Monday, the bank raised its overnight loan rate
to 14.5 percent from 7.5 percent, a move also expected to
support the currency.
The central bank said on Monday the banking system had lost
10 percent of hryvnia deposit volumes since the start of the
year. Foreign currency deposits fell 14 percent, it said.
In an interview on the sidelines of IMF-World Bank meetings
in Washington on Sunday, National Bank of Ukraine Governor
Stepan Kubiv said Kiev had started working on floating its
currency, and planned to move to full inflation-targeting within
Ukraine's annual inflation rate was 3.4 percent in March,
according to the consumer price index, up from 1.2 percent in
February. Inflation was 0.5 percent in 2013 but the government
has forecast that will surge to 12 percent this year.
The government has announced an increase of over 50 percent
in gas prices for consumers from May 1 after Russia increased
(Writing by Natalia Zinets and Conor Humphries; Editing by