Ukrainian bank hikes interest rates .hurriyet2008-detailbox-newslink { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:none; color:#000000;} .hurriyet2008-detailbox-newslink:hover { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:underline; color:#990000;} KIEV - Ukraine’s central bank raised its refinancing rates for the second time in two days to cut loans to lenders and bolster the hryvnia after the currency fell as much as 16 percent in two days.

The Kiev-based Natsionalnyi Bank Ukrainy raised its overnight rate to 22 percent from 18 percent, when Treasury bills are used as collateral, the bank said Friday on its Web site. The rate for non-collateral loans was raised to 25 percent from 20 percent.

The hryvnia has plunged 38.83 percent against the dollar this year as investors shunned assets in emerging markets amid global financial turmoil. Ukraine, like other developing markets, including Hungary and Latvia, has turned to the International Monetary Fund for a loan, signing an agreement for $16.4 billion.

The Ukrainian central bank increased lenders’ refinancing funds in October, injecting 29.230 billion hryvnias ($3.21 billion), compared with 5.96 billion hryvnias lent in September. It injected 39.6 billion hryvnias in November and 16.5 billion hryvnias as of Dec. 17, according to central bank data. President Viktor Yushchenko said on Nov. 20 the banks spent part of refinancing to buy dollars, adding pressure on the hryvnia.

Paring losses
The hryvnia rose 10 percent to 8.2500 per dollar at interbank market at 1 p.m. in Kiev trading Friday. That pared an earlier 18 percent two-day drop to a record 9.78 after the central bank sold reserves to support the currency.

The bank doesn’t plan to raise its 12 percent key discount rate for now, Petro Poroshenko, the head of the central bank council, said Thursday, though the Finance Ministry said in a statement on its Web site it was "advising" an increase to 18 percent.

"A hryvnia level above 9 per dollar is unacceptable, it threatens the economy and banking system," Poroshenko said Friday at a press conference in Kiev. "The situation with the hryvnia rate demands urgent measures."

Ukraine has enough reserves to stabilize its currency and wants exporters to sell part of their revenue from abroad, Poroshenko said.

Yushchenko also agreed Friday with the central bank that it will sell dollars on a daily basis in the interbank market to prop up the hryvnia. The bank will also check lenders and revoke licenses of those found guilty of speculating against the currency.