KIEV, Sept. 22 – Ukraine’s hryvnia strengthened slightly against the U.S. dollar on Monday as the dollar weakened around the world in response to the U.S. government’s attempts to work out a $700 billion package to bail out the country’s financial sector.

The dollar fell 2% against the euro in one day of trading on Monday.

In a related matter, Russian share prices rallied Monday after the Russian government spent at least $20 billion Friday to support share prices.

The efforts were aimed at stopping a global financial meltdown that had been spreading quickly over the past week, but most adversely affecting emerging markets, such as Russia, China and Ukraine.

The Ukrainian government, due to a lack of available resources, has not been intervening in the markets, but the country’s stock market benefited from the interventions elsewhere in the world.

The hryvnia closed at 5.01 hryvnias to the U.S. dollar in trading between commercial banks Monday, compared with 5.03 hryvnias/dollar Thursday. This was a rebound after the hryvnia had lost almost 4% in the course of two days last week.

Ukrainian stocks also rose, with PFTS, the country’s benchmark stock index, adding 1.22 to 398.56 on Monday, following a 50.24 point increase on Friday.

The index, however, was still 66.1% down since January 1 and 25% down since September 1, underscoring a major selling pressure.

But Economy Minister Bohdan Danylyshyn said Monday the major selling pressure was probably over and suggested that investors should now be looking at Ukraine’s strong economic growth – 7.1% on year in January-August - for further investment clues.

“The further selling of stocks is not likely,” Danylyshyn said. “This means that only biggest players remain on the stock market, the players that are not seeking quick profits.”

But Danylyshyn predicted there will probably be no major international investors coming to the Ukrainian stock market any time soon, at least through the end of the year.

Meanwhile, the hryvnia was also facing downward pressure due to Ukraine’s widening foreign trade deficit, a trend that was likely to continue during the next three years, according to the government.

Ukraine recorded $11.05 billion in deficit while trading with goods in January through July, a stunning increase from $5.11 billion reported in the same period a year ago, according to the latest statistics.

The National Bank of Ukraine pledged to defend the hryvnia within the band of 4.65 and 5.05 to the dollar through the end of 2008, and between 4.60 and 5.10 hryvnias to the dollar in 2009.

Any further depreciation of the hryvnia will show whether the NBU will be willing to spend its hard currency reserves to support the hryvnia, analysts said.

The NBU’s reserves rose to $38 billion as of early September, up 17.3% from early January, according to the bank. (nr/ez)