by: Lingnan Cheng

update: Feb 22, 2015 05:49 GMT+8

Ukrainian currency hits record low

Ukraine's currency, the hryvnia, hit a record low on Monday, despite foreign exchange controls implemented by the country's central bank.

The official exchange rate of the hryvnia fell sharply by 7 percent on Monday, when it was trading at 30 against the U.S. dollar. By Wednesday, the hryvnia was trading at 35 against the U.S. dollar at some foreign exchange stores. In addition to the soaring inflation, which hit almost 25 percent in December, the conflict in the east of Ukraine also contributed to the currency's devaluation.

To curb the inflation, Ukraine's central bank raised its key refinancing rate to 19.5 percent from 14 percent in early February.

The falling currency has led many stores to hike prices this week, with the price of some international brands rising by 40 to 50 percent in just two days.

"All things, including petroleum, have risen in price. We hope that everything can stabilize and return to normal by autumn. We are tired of the inflation and currency devaluation. However, we know that it will be a really hard year for Ukrainians and the country's economy," said Andre, a Kiev resident.

Analysts in Kiev say that as Ukraine's government set one U.S. dollar to cost 21.7 hryvnia in its 2015 budget calculations, if the currency continues to devalue and the government's austerity plan is impacted, there could be a tariff increase in two to three months.