06/11/2014 Ukraine: Daily Highlights - Foreign exchange markets of both Russia and Ukraine demonstrate local currencies collapse

06/11/2014 Daily Highlights from “Digests & Analytics Ukraine” News Agency

Foreign exchange markets of both Russia and Ukraine demonstrate local currencies collapse due to mounting economic problems. Situation remains extremely tense in the conflict zone in Donbass. Russia resists the international efforts aimed to resolve the situation in Ukraine.

Ukraine

• President Poroshenko chaired a meeting on the situation with parliamentary elections vote counts. Votes still haven’t been counted in two districts.
• Future coalition negotiations are ongoing between four parties - elections winners with participation of not only fractions, but also deputy groups.
• Vice Prime Minister Sych confirmed that number of temporary re-settlers from the combat zone in Donbass surpassed 400 thousands. At the same time, flow of those willing to leave for Russia decreased. Due to the lack of state support, people are forced to return to their places of permanent residence.
• National Bank sharply decreased the exchange rate of Ukrainian hryvnya: 3.96 UAH/USD (+46cop), 17.42 UAHEUR (+53cop), 3.14 UAH/10 RUB (-8 cop). By the end of the session quotes reached 14.6 UAH/USD.

Kyiv

• Kyiv City Council will buy a new voting system instead of the one damaged during the Maidan, and plans to launch it in 2015.

War in Ukraine

• Situation in Donetsk and suburbs remains very tense. Militants shelled Avdyivka, Pisky and Donetsk airport. Shelling and attacking of Ukrainian army positions are ongoing across the frontline. 2 military and one volunteer from the “Right Sector” were killed, and several were wounded.
• There are reported cases of militant armed groups in the Donbas putting on the uniform of Ukrainian Armed Forces and labeling military equipment with Ukrainian insignia, which indicate preparations of large-scale provocations.
• State Border Service has established a new procedure for passage into the area of Donbas controlled by militants.
• Russia is getting ready to send another “humanitarian convoy” to Donbas.

International

• The United States successfully tested an anti-missile defense system Aegis. One component of this system is to be deployed next year in Romania.
• Russian Foreign Ministry questioned the advisability of holding talks on de-escalation of the conflict in Ukraine in the "Geneva" format between Russia, Ukraine, the EU and the US, as the previous agreement has not yielded results.
• Russian President Putin justified the signing of the Molotov-Ribbentrop Pact, which led to the occupation of Poland.
• EU High Representative of the Union for Foreign Affairs and Security Policy Federica Mogheriniclaimed that Russia is trying to sow discord among the members of the EU on the Ukrainian question.
• Press-secretary of Russian President Peskov informed that Putin doesn’t plan to meet leaders of DPR and LPR.
• Russian foreign currency reserves shrunk to five years low. US dollar and European EUR reached five-year maximums on the Russian forex market. Russian Central Bank abandons the policy of maintaining exchange rate corridor. Capital flight exceeded the government forecasts and reached more than $110 billion.

Trends

• Delaying the announcement of official election results may lead to serious consequences in the event of a sharp escalation of the conflict in the Donbas.
• New Parliament gave priority to developing and enacting military doctrine indicating Russian Federation as a potential opponent.