Ukrainians hit by falling currency

WATCH: Ukrainians hit by falling currency

As more than a third of outstanding loans to Ukrainian households and companies are held in U.S. dollars, the rapid decline of Ukraine’s currency since the anti-government demonstrations began in November is sounding alarm bells.

The currency the Hryvnia’s slump has hit the pocketbooks of millions of ordinary Ukrainians.

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Vlad and Tonya Andriychuk struggle with their shopping in the Ukrainian capital Kiev.

As most Ukrainians save and do business with U.S. dollars, the devaluation of the Hryvnia has led to a spike in the cost of basics.

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“I work and my husband works and we still don’t have enough money. We can only afford to buy groceries with this money and now the dollar rate has gone up and so the price of food have gone up and petrol and for all the needs of our family,” said Tonya, a veterinarian living in Kiev.

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The issue has taken center stage at demonstrations, where the government’s handling of the economy is being blamed.

“During this week, out of the pocket of every one of you they have pulled out ten percent of all the money you have,” said Petro Poroshenko, the Independent Member of Parliament.

The government has taken emergency action to prop up the ailing currency.

Temporary laws introduced last week include strict limits on individual purchases of foreign currency as well as a six day wait for companies.

Economists say a controlled devaluation two years ago could have helped rebalance the country’s trade deficit, but warn the emergency measures could now lead to bank runs and alarm foreign investors.

“Some holder of Ukrainian foreign debt will say we don’t want to prolong your loans we want to get our payment now, this can create a lot of additional pressure on the Hryvnia in the medium term,” said Alexander Zholud, an economist of the International Center for Policy Studies.

In the short term it means more economic pain for millions of Ukrainians like Tonja Andriychuk whose family budget leaves no leeway for a further economic shock.