Natalia Zinets

KYIV, Reuters -Ukraine’s assets fell under pressure after a sharp escalation with Russia. The hryvnia plummeted to levels that were last seen in 2015 as the country headed towards default.

Russia officially recognized two regions of eastern Ukraine that were seized by the Russians late Monday night. This has raised fears of war and shaken global financial markets.

The hryvnia of Ukraine fell as high as 1.4%, to 29.1196 USD – the lowest level it has been since 2015 when the currency plunged sharply as the country tries to restructure its debt.

Since October, the currency lost nearly 10%. This was when investors fled Ukraine to avoid Russian troops near Ukraine’s borders. There are also growing fears that Russia may be preparing for an attack on Ukraine. This has been refuted by the Kremlin.

The dollar-denominated sovereign debts of Ukraine also fell.

Tradeweb data indicated that its 2032 bond lost 2 cents in dollar and traded at an all-time low 71.694cs. Ukraine’s GDP-linked 2040 bond traded at 58.303cs after losing around half of its value in June.

Scope Ratings Berlin, Dennis Shen stated that Ukraine could be subject to further pressure if the situation escalates.

Shen stated in an email comment that “there are still many scenarios available, including those observing deescalation as long the negotiations continue.” “However, such scenarios have narrowed in view of Russia’s most recent actions.”