Ukraine Hikes Interest Rates To Stabilize Currency

Ukraine's central bank has sharply raised the country's interest rate in an effort to stabilize the national currency and halt inflation.

National Bank chief Valeriya Hontareva said in Kyiv the benchmark interest rate would be increased from 19.5 percent to 30 percent as of March 4.

The move is aimed at stabilizing the value of the hryvnya, which has lost 80 percent of its value against the dollar since January 1.

Prices in January were 28.5 percent higher than in January 2014.

The Ukrainian economy -- forecast to contract by 5.5 percent in 2015 -- has suffered in the past year as government forces fight pro-Russian separatists in eastern Ukraine and trade with Russia has almost ceased.

The interest rate increase comes ahead of a decision by the IMF, expected on March 11, to release a $17.5 billion loan that Kyiv needs to avoid a default on its debts.

Based on reporting by AP and AFP