KIEV, Feb. 23 – The hryvnia fell sharply against the U.S. dollar on Monday amid concerns the government’s failure to secure a loan from the International Monetary Fund would push Ukraine closer to default.

The hryvnia closed at 8.93 to the U.S. dollar in trading between commercial banks on Monday, compared with 8.40/dollar on Friday, despite heavy interventions from the National Bank of Ukraine, dealers said.

The hryvnia fell even more steeply on the cash market with most banks buying the hard currency at 9 hryvnias per dollar and selling at 9.20 hryvnias per dollar. These compare with the NBU’s official exchange rate of 7.7 hryvnias per dollar.

“Where did the dollar worth 9 hryvnias come from?” Arseniy Yatseniuk, a former speaker of Parliament and a former governor of the NBU, said in a statement on Monday.

“Ukraine failed to receive the second installment from the IMF, the government and the NBU failed to get hard currency reserves to stabilize the exchange rate,” Yatseniuk said. “That’s why the NBU does not have a chance to support the [hryvnia’s] stability in full.”

The IMF earlier this month suspended its $16.4 billion rescue package it had approved for Ukraine last year after Prime Minister Yulia Tymoshenko’s government had refused to narrow budget deficit by cutting spending and implement other austerity measures.

Finance Minister Viktor Pynzenyk, in disagreement with the prime minister over budget deficit, quit the job last week, while analysts said Ukraine may face default on its foreign debt obligations without a continued cooperation with the IMF.

“When representatives of the executive authority say that the budget deficit and sources of its financing are not the reasons for concern they send a signal to the IMF that weakens its desire to continue the cooperation,” Valeriy Lytvytskiy, the chief economic analyst at the NBU, told Interfax-Ukraine.

Ukraine has received the first installment worth $4.5 billion from the IMF loan package last year, but the continued lending is important to support the NBU’s ability to keep the hryvnia from losing value too fast.

The second installment worth about $1.85 billion was supposed to be disbursed earlier this month, but had been postponed due to the disagreement over budget deficit.

The NBU already spent $2.8 billion to support the hryvnia since the beginning of the year, including $1.15 billion between February 1 and February 20, reducing its foreign exchange reserves to $27.67 billion, according to NBU data.

But the high pace of hard currency interventions makes it very hard, if not impossible, for the NBU to stick to its earlier pledge to the IMF of keeping the country’s forex reserves at $26.3 billion before the end of March, analysts said.

Since some of the NBU’s reserves will be used to pay natural gas debts to Gazprom before March 7, the NBU would have at its disposal not more than $35 million to spend every day on the interventions backing the hryvnia through the end of March, analysts said. This is less than a half of what the NBU has been spending so far.

“The NBU simply does not have enough foreign exchange,” a top official at commercial bank in Kiev said. “They have nothing to sell until they get the second installment from the IMF.” (tl/ez)