Ukraine's currency is hovering close to an all-time low as fears grow over the mounting economic and human costs of the conflict with pro-Russian separatists. Unease has also spread to European markets as a stand-off over a Russian aid convoy threatens to escalate the crisis. Ivor Bennett reports.
The currency boards could barely keep up. The biggest one-day drop since the conflict began took Ukraine's currency to an all-time low. At the start of the year the hryvnia was close to 8.2 against the dollar. Now it's reached 13.4. Vladyslav Sochynsky is deputy head of Citibank in Ukraine. (SOUNDBITE) (Ukrainian) DEPUTY HEAD OF CITIBANK IN UKRAINE, VLADYSLAV SOCHYNSKY, SAYING: "What we see is a classic capital outflow, when those clients who have hryvnias on their hands are looking to buy dollars. Maybe they don't feel very comfortable with their money in Ukraine and by all official and unofficial means they are trying to send their hard currency abroad." Ukraine's central bank says it will intervene to help offset the panic. But it could be a losing battle - tensions are growing on a daily basis. The latest flashpoint came after Russia sent an aid convoy bound for eastern Ukraine. So far it's been refused entry - Kiev fearing it could be cover for an invasion. Prime Minister Arseny Yatseniuk. (SOUNDBITE) (Ukrainian) UKRAINIAN PRIME MINISTER ARSENY YATSENIUK ARRIVING, SAYING: "The level of Russia's cynicism knows no bounds. First they send tanks, Grad missiles, terrorists, bandits who fire on Ukrainians and then they send water and salt." The crisis has left many in the region in desperate need of help. Residents in the town of Semenivka are returning to homes that are no longer there. But what happens next is still unclear - the Russian convoy will only be accepted if handed over to the Red Cross. And European markets are watching more closely than ever, says BNY Mellon's Simon Derrick. SOUNDBITE (English) SIMON DERRICK, CHIEF CURRENCY STRATEGIST, BNY MELLON, SAYING: "It's quite clear that this is having a negative impact on market sentiment and the longer this drags on the worse it gets. The important bit is where it's having the key impact and it's quite clear it's having it within Europe and specifically within the euro zone." Russia's largest EU trading partner Germany is bearing the brunt of the impact with the exposure hitting corporate earnings. Germany's biggest utility EON the latest to suffer. The firm posting a 12 percent fall in core earnings in the first half of the year.