Ukraine raises key interest rate, awaits on second tranche

The Ukrainian National Bank (NBU) announced Tuesday a decision to raise the key interest rate to its highest level in 13 years in a bid to stem the soaring inflation and support the local currency.

The increase to 17.5 percent, from the previous level of 15 percent, is a far cry from the 6.5 percent at the beginning of the year.

The lifting was widely anticipated as the Ukrainian currency, the hryvnya, has depreciated by around 40 percent since early February.

On Aug. 12, the NBU devalued the official rate of the hryvnya to an all-time low against the U.S. dollar -- 13.14 hryvnya per dollar.

According to the bank's forecast, the country's inflation rate will reach 19 percent in 2014, compared with 0.5 percent last year.

Meanwhile, Ukrainian Prime Minister Arseny Yatsenyuk said Tuesday that his country hope that the International Monetary Fund (IMF) will decide on the disbursement of the second tranche of its 17-billion-U.S.-dollar loan package for Kiev this month.

He said that his country is in urgent need of the 1.4 billion dollars to stabilize its financial market.

Ukraine received a 3.19-billion-dollar first tranche in May and used it to boost its weak foreign exchange reserves and stabilize the macroeconomic and financial situation.

In order to receive the second tranche, the IMF said, Ukrainian authorities have to push forward reforms agreed with the fund.