Banknotes of Ukrainian hryvnia. Reuters
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Ukraine's hryvnia currency plunged about 30 percent against the dollar Thursday, traders said, after the central bank abandoned the foreign currency auctions that had effectively pegged the exchange rate.The central bank scrapped the daily auctions, which had set an unofficial peg for banks to follow, and also raised its main interest rate to 19.5 percent Thursday as it sought to avert a Ukrainian financial collapse, brought ever closer by fighting in the country's east and a lack of foreign funding.With the hryvnia declining even before Thursday's drop, and Ukraine's foreign exchange reserves falling to $6.4 billion – barely enough to cover five weeks of imports – the bank has few ways to revive an economy on the brink of bankruptcy.The central bank raised its key refinancing rate to 19.5 percent from 14 percent, to take effect Friday, as it seeks to curb annual inflation which hit almost 25 percent in December.Ukraine has already received $4.6 billion from the IMF as part of a $17 billion aid program, but is seeking to extend that program in terms of time and money.
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