The central bank raised the value the national currency against the U.S. dollar in hopes of curbing inflation Thursday, a move that Ukrainians say will wipe out chunks of their savings.
The 2.7 percent revaluation of the hryvna set the exchange rate against the dollar at 5.05 hryvna, as compared to 5.25 hryvna on Wednesday. Ukrainians, who mostly keep their money in dollar savings, called the move outright theft.
"Our money is being stolen," complained secretary Lena Levina, 29.
President Viktor Yushchenko's government had warned that it planned to strengthen the hryvna in an effort to fight double-digit inflation.
The process of revaluation was to continue, with the National Bank announcing the rate would drop further Friday to 5.02 hryvna to the dollar.
Prime Minister Yulia Tymoshenko, who lobbied for strengthening the hryvna, insisted Thursday that Ukraine's economy would benefit in the long run.
"Artificially maintaining a low course for the hryvna is absolutely illogical because its value must be set by the market," she said, adding that imports would become cheaper and inflation would drop as less money is printed.
But the National Bank's move, bringing the exchange rate to its lowest level since 1999, caused grumbling among Ukrainians, who have already had to cope with rising meat and gasoline prices since the new government came to power.
Ukrainian lawmakers sharply denounced the bank's move in parliament, summoning the head of the National Bank to Friday's session to explain. Signs of dissent also emerged in the Cabinet.
Economic Minister Serhiy Teryokhin warned that the move could lead to panic, adding "it seems to me that the National Bank doesn't understand itself what it is doing," according to the Interfax-Ukraine news agency.
Paul Bermingham, the World Bank's director for Ukraine, Belarus and Moldova, insisted "the hryvna is strong and stable."
"It's not very wise to look at the currency exchange rate on one-day basis. You'll have to look at it from bigger prospective," he told reporters in Kiev. "It is desirable for Ukrainian economy to have a more flexible exchange rate."
But Mykola Rudkovsky, a lawmaker from the Socialist Party which joined the coalition that helped usher Yushchenko into power, warned that strengthening the hryvna would result in losses for exporters. That could cripple the country, which counts on exports for more than 60 percent of its gross domestic product.
Tymoshenko insisted Ukraine's exporters could still compete on the international market.
Ukraine exports include ferrous and nonferrous metals, fuel and petroleum products, chemicals, machinery and transport equipment.
MARA D. BELLABY, Associated Press Writer
On the photo: Ukraine's Prime Minister Yulia Tymoshenko