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Ukraine's central bank sought to calm its currency market on Tuesday by selling $100 million and promising to stabilise the hryvnia after it fell to a five-month low against the dollar. Focus Ukraine's central bank sought to calm its currency market on Tuesday by selling $100 million and promising to stabilise the hryvnia after it fell to a five-month low against the dollar.

The lack of dollar supply from exporters pushed the Ukrainian currency <Hr=> to 7.94 per dollar on Tuesday, the lowest point since early April, prompting the central bank to offer its support, dealers said.

"The central bank will continue interventions for as long as it is necessary to smooth the exchange rate fluctuations," the central bank spokesman Serhiy Kruglyk said in the regulator's first official statement on the hryvnia's fall that started last week following the departure of a top official responsible for exchange rate policy.

"Our main goal is supporting a stable national currency."

Ukraine central bank, which had reserves of $32.7 billion on Aug. 31, said it sold $100 million on Tuesday.

Market players said the interventions were effective.

"They (the central bank) have met all the outstanding demand," said a trader at a foreign bank in Kiev.

The central bank offered to sell dollars at 7.9269 hryvnias per dollar on Tuesday.

In percentage terms, the moves in the hryvnia are tiny in comparison with weakening since the financial crisis erupted in 2008. But the weakening in the last week is the first since early June and shows investors concerned that the resignation of the central bank's First Deputy Chairman Anatoly Shapovalov and state energy firm Naftogaz's dollar buying spree may indicate the government intends to weaken the currency. [ID:nLDE6851OC]

Shapovalov's replacement Serhiy Arbuzov is seen as an ally of President Viktor Yanukovich and investors are concerned that he may be less keen on a stronger hryvnia, which hurts the powerful "steel lobby" backing them.

Naftogaz, which buys dollars to pay for imports of Russian gas from Gazprom <GAZP.MM> at the beginning of every month, also surprised traders by seeking foreign currency directly from the market which it had previously bought from the central bank.

The combination of factors saw the hryvnia lose around 0.2 percent last week, turning back on what has been a steady rise since June and prompting the central bank to intervene to support the currency on Friday and again on Tuesday.

"We expect the market to open tomorrow at the level where the central bank was trading but we have a feeling some exporters who were unable to sell dollars today will do so tomorrow," said a foreign bank dealer, noting that some trades may have been postponed due to a U.S. holiday on Monday. "We do not rule out a certain correction (towards a stronger hryvnia)."


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