KIEV, Dec 6: Ukraine, hit by recession and daily protests against President Viktor Yanukovich’s government, may tighten its control of the local forex market in the coming months to keep its currency pegged to the dollar, a Reuters poll showed.

The economy, dominated by steel exports, has been in recession since the second half of 2012, and the current account deficit has widened this year.

The hryvnia currency has eased to 8.28 to the dollar from about 8.1 in January.

Analysts from 16 banks and brokerages on average expect it to be close to 8.3 at the end of December before sliding out to 8.7 to the dollar next year.

“Very often the hryvnia rate in Ukraine is determined not by market factors but administrative and political factors”, said Svetlana Rekrut of Credit Rating Agency.For Yanukovich, who triggered street demonstrations by spurning a pact with the EU and seeking closer ties with Moscow, letting the hryvnia weaken ahead of a re-election run in early2015 will make imports more expensive and is a certain vote-loser.

Eric Nayman of Capital Times said changing the controlled rate policy was “not economically feasible” for the government.

“Depreciation of the hryvnia will increase the debt burden on the state budget, which experienced a lot of problems already. Therefore, tight control over the currency market in Ukraine will continue and even increase,” he said.—Reuters