Ukraine currency Hryvnia plummets as Russia invades Ukraine. Ukrainian stock market regulator halts the circulation of securities on February 24, 2022.
USD/UAH Halted at 30.05 on February 24, 2022
The USD/UAH was trading at 30.05 on February 24, 2022. The stock market regulator has stopped the circulation of all securities in Ukraine as the Ukraine-Russia war crisis escalates. Only monetary policy decisions by the central bank can operate, say authorities.
Interbank currency purchases in Ukraine have come to a halt, as an economic meltdown, loss of life, and heavy destruction in major cities, bring the country to a standstill.
The central bank governor, Kyrylo Shevchenko, says that the decision to ban the purchase of foreign currency is due to the massive destruction of Ukrainian assets by the Russian military forces.
Foreign investors move away from the Ukrainian bonds as missiles aimed by the Russian soldiers hit the country.
The Economy of Ukraine Beaten by the Russian Missiles
GDP in Ukraine rose 5.9% for the fourth quarter of 2021. The country saw growth of 2.6% in the third quarter, 2021. Ukraine is now under heavy pressure as the economy collapses. High inflation is another problem that causes a surge in prices.
The agricultural sector in Ukraine put up a robust performance in 2021. Ukraine exports most of its wheat grains, corn, and barley to other countries. But now, the food grain supply has stopped, disrupting the supply chain.
The economic consequences wrought by the escalating war with Russia are serious, warns the International Monetary Fund. Food prices are soaring with supply disruptions. It will add to inflationary pressure. Global growth will come down by one percent this year, states the IMF.
More than 1 million refugees have fled to neighboring countries. There is a heavy loss of life as people leave homes and belongings to protect their lives. Food and fuel prices are skyrocketing, which affects the poor and homeless.
The war has caused severe damage to Ukraine. Roads, bridges, airports, and seaports are blocked or destroyed. The country faces a severe financial crisis and needs more finance to reconstruct its economy once the war ends. The Russian missiles are ruining major towns and cities.
Ukraine’s Trade Partners
Ukraine exports sunflower oil to other countries, contributing to 46% of total sunflower seed and oil production. The Observatory of Economic Complexity states that Ukraine is the largest supplier of sunflower oil. Russia is the second-largest sunflower oil exporter and contributes 23% of the global supply of sunflower oil. The war disrupted the supply chain to most countries, raising the price of crude oil.
Ukraine’s largest trading partners are Russia and China. The rich and fertile soil has made Ukraine rich in crop production. Italy, Germany, and Turkey depend on Ukraine to supply grains and potatoes. Ukraine is the chief supplier of corn and iron ore to China. China imports corn for feeding pigs. Pork is the staple meat in China, and it depends on Ukraine to meet consumer demand for pork.
Russia supplies crude oil to China. It exports more than 1.5 million barrels of oil per day to China. Severe sanctions hit the Russian economy as the Ukraine war escalates. The supply disruptions and sanctions on Russia will have an adverse effect on the global economy and forex and stock markets.
The Russian Rouble weakened almost by half as the country faces heavy sanctions from the Western countries. Crude prices have surged higher, with supply disruptions affecting global production. Crude prices are trading at $130 per barrel.
Commodity prices are up at life-highs as import and export of goods and services are hit. The sanctions imposed on Russia have brought a surge in commodity prices. Aluminum prices are at lifetime highs. Wheat and food prices are surging ahead, causing high inflation in the global economy.
Investors Rush to Gold and the Japanese Yen
The Ukraine war drives investors to safe-haven currencies. The Japanese Yen and the US Dollar are haven currencies that investors prefer during this period of turbulence.
The war in Ukraine brought weakness in the Euro, while the Japanese Yen climbed higher. The US Dollar is on the front foot again. Risky currencies are struggling at support levels as the war crisis continues in Ukraine.
The US Dollar is trading just below the psychological resistance at $100. The USD shot higher as investors rush to shift their investments to safe-haven assets.
The USD/JPY is trading at 115.53 as investors unwind their position in the British Pound and the Euro.
The Euro to Dollar currency pair is trading lower at 1.0893, at two-year lows, at levels last seen in April 2020. The European Union is the worst hit, as it depends on the Russian crude oil supply.
The British Pound to Dollars is trading at the year’s low at 1.3114.