After falling for most of the year, the hryvnia has steadied since the start of December. But the tightly managed currency is still more than 1% weaker than where it started 2012, and investors expect its decline to continue in the new year.
“A couple of months ago, just after the elections, we sold all our Ukraine exposure, both sovereign and corporate,” said Viktor Szabo, an emerging-market debt portfolio manager at Aberdeen Asset Management in London, which manages around $9.5 billion in emerging markets debt.
Investors’ concerns intensified earlier this month when both Moody’s Investors Service and Standard & Poor’s Corp. downgraded Ukraine’s credit rating further into junk territory and the IMF decided to delay its visit until January. The reinstatement of Mykola Azarov as prime minister last week is unlikely to bring much relief; Mr. Azarov has been a committed opponent of increasing gas tariffs on households.