MOSCOW, Aug. 12 - Analysts at Citi believe that investors must reassess the risks in Ukrainian assets owing to the current situation in the Transcaucasian region.

The Citi note said: "A more aggressive Russian foreign policy within the former Soviet Union is likely to pose a threat to Ukrainian asset prices."

"This looks particularly likely in view of the fact that we already believe that Ukraine's fundamentals will deteriorate during the latter part of 2008 on the back of the prevailing inflationary growth mix. As such, widening external deficits should become an increasing source of pressure on the hryvnia as seasonal support fades and key reforms are shelved, all of which threatens the outlook for capital inflows," the note said.