What next for the hryvnia?

The hryvnia has fallen sharply over the past few days, reaching 9/$ earlier today, its lowest level since 2009. We estimate that the currency needs to fall by a further 15% or so, to around 11/$, in order to put Ukraine’s balance of payments position on a more sustainable footing. But history suggests that coming against the backdrop of political instability and thin FX reserve coverage, the currency could overshoot on the downside.