February 10, 2014 / 12:10 PM / in 4 years

UPDATE 1-Ukraine cbank offers to buy dollars after imposing currency controls

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KIEV, Feb 10 (Reuters) - Ukraine’s central bank offered to buy dollars on the interbank market on Monday after imposing new capital controls on Friday in a bid to bolster the hryvnia.

In a statement, the central bank said it was offering to buy dollars at $/8.4900 hryvnias compared to $/8.5400 on Feb. 7.

Ukraine is struggling to prop up its currency amid a political crisis that has seen anti-government demonstrators take to the streets to protest against moves that would bring the former Soviet republic closer into Moscow’s economic orbit.

Russia suspended a $15 billion bailout after President Viktor Yanukovich, in a concession to the protesters, sacked his pro-Russian prime minister on Jan. 28. Moscow says it will resume the funding programme only when it knows who will be the new prime minister.

The central bank brought in the temporary currency controls after the hryvnia fell below 9 per dollar for the first time in five years.

They include a limit on private transfers abroad of around $5,700 a month and bans on purchases of foreign currency for overseas investment or early repayment of loans.

Clients wishing to buy foreign currency will be required to tie up their funds for six days in special accounts before receiving it. Individuals can transfer abroad no more than 50,000 hryvnia - now worth about $5,700 - in foreign currency a month.

The hryvnia, which has plunged 10 percent against the dollar since the crisis broke in November, was holding its level of $/8.50 when money markets opened on Monday.

With the central bank practically the only buyer of dollars on the market and with low hryvnia liquidity, one dealer foresaw the hryvnia staying within a corridor of $/8.40-8.50 this week and sees the dollar only strengthening in value next week.

Reporting by Natalia Zinets; Writing By Richard Balmforth; Editing by Susan Fenton

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