Limits set on banking activities in Ukraine

By YURAS KARMANAU
The Associated Press

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DONETSK, Ukraine — Ukraine's Central Bank moved yesterday to counter a run on banks by imposing limits on the amount of money citizens can exchange and withdraw, as long lines formed at automated teller machines in the country's pro-Russian industrial heartland.

Analysts said fears of economic collapse were stoked in part by outgoing President Leonid Kuchma, who earlier likened the divided nation's finances to a precarious "house of cards."

The lines at currency-exchange points and banks have not been seen in the capital, Kiev, but the face-off between Prime Minister Viktor Yanukovych and opposition leader Viktor Yushchenko after the bitterly disputed presidential election has caused concern among many Ukrainians about their savings.

Nowhere are those worries stronger than in the Donbass region, Yanukovych's home base.

"I'm afraid of 'orange instability' and economic collapse and I want to protect myself," said factory worker Zinaida Khoroshun, 44, referring to the orange colors of Yushchenko's supporters, who have demonstrated in the capital for more than a week.

Standing in line to retrieve her wage — worth about $115 — from an ATM in Donetsk, Khoroshun voiced fears shared by many in the region who are rushing to turn their hryvnia into dollars.

Andriy Dmytrenko, an analyst with the Kiev-based Dragon Capital investments house, noted the Central Bank's hard-currency reserves of $10.5 billion gave no grounds for alarm.

Citing the Prime-Tass news agency, Dow Jones NewsWires reported that the Central Bank had limited the amount of dollars that could be bought to $1,000 until Dec. 31.

It also banned retail banks from allowing clients to redeem term deposits early.

Companies would be able to withdraw only 80,000 hryvnia (about $15,000) a month, excluding wage and social payments, while private individuals and companies would be able to withdraw only 1,500 hryvnia ($280) a day from ATMs.

Copyright © 2004 The Seattle Times Company

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