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Ukraine Interbank Rates Soar to 20 Percent

Overnight borrowing rise more than 15 percentage points in just over a week, as central bank intervention creates cash shortages.

By Piotr Bujnicki and Daryna Krasnolutska, Bloomberg | Updated on December 09, 2013

Ukrainian interbank lending rates soared to a one-year high as policy makers’ bid to prop up the currency depletes cash from the economy and threatens to deepen the country’s third recession since 2008.

The KievPrime overnight index, which shows one-day borrowing costs for the country’s lenders, jumped to 20 percent at today’s daily fixing from 12 percent on Dec. 6 and 4.32 percent on Nov. 29. Investors sold Ukraine’s dollar notes, driving yields to record highs, after the country’s foreign reserves dwindled 9 percent last month, according to central bank data published on Dec. 6.

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