Reuters: US Dollar Report: UPDATE 2-Ukraine moves to defend currency peg

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UPDATE 2-Ukraine moves to defend currency peg Nov 6th 2012, 18:18 Tue Nov 6, 2012 11:06am EST KIEV Nov 6 (Reuters) - Ukraine's parliament voted on Tuesday to give the central bank legal powers to force exporters to convert at least part of their foreign currency earnings into hryvnias. Such measures have been used by other emerging market central banks to defend their currencies during crises, but had been eschewed by Ukraine since 2005. The forced conversions will also help the central bank maintain its reserves, which have been depleted by interventions. The central bank has used market interventions to keep the hryvnia trading at around 8 per dollar since early 2010 but market players say the pressure for depreciation is mounting as Ukraine's trade gap widens and its economy weakens. The bank's reserves fell to $29.3 billion as of Sept. 30, 2012 from $34.6 billion at the start of 2011. The hryvnia hit a 3-year low of 8.19 per dollar this week as some market players expected the authorities to allow some depreciation following parliamentary election's on the Oct. 28. The bill adopted by parliament on Tuesday needs to be signed into law by President Viktor Yanukovich.

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