Twin Ukrainian shocks: tumbling hryvnia and sharply higher inflation.

[dipsydoodle]

There’s a lot of panic in Ukraine now, and not only the prospect of a Russian military invasion. Everyone who buys anything (which is all of us) are alarmed at increasing prices and the decreasing value of the hryvnia, Ukraine’s battered national currency.

The turmoil in the country has pushed the hryvnia to all-time lows, spurring people to buy dollars and euros.

The hryvnia has dropped around 50 percent since the start of the year, before improving slightly to 11.3 against the dollar on April 17.

Ukraine’s financial solvency depends on receiving help from international creditors.

http://www.kyivpost.com/content/business/twin-ukrainian-shocks-tumbling-hryvnia-and-sharply-higher-inflation-344076.html

[The Magistrate]

1. Question Whether A Country Will Survive Intact, Sir, Will Do That To A Currency....

Anyone interested in the welfare of ordinary folks in Ukraine will denounce anyone threatening division and invasion, and call for stability and order.

[Igel]

2. They're also in for some longer-term dislocations.

They'll have to reorient themselves away from their main two exports:

Weapons, produced on Russian equipment for Russians to export from Russia (in this, they're like the first-line assembly plants in Mexico; cheap labor, working to foreign specs on foreign-owned equipment and in a sense "owned" by the neighboring country that likes to keep them poor and dependent).

Cheap stuff, esp. things like steel, of made-to-Russian specs for export only really to the Custom Union. It's a limited market and the market controls the supplier.

Everything from rail gauges to steel quality to labelling of foodstuffs will need to be rejiggered. Russia's probably right--it's impossible to abide by SNG/Custom Union regs and by EU regs. Not in all cases. There are companies that successfully manufacture to both American specs and EU specs.