Mediaboss Marketing

Sanctions

The United States and European Union have imposed economic sanctions on Moscow since Russia seized Ukraine's Crimea peninsula in March and began backing pro-Russian rebels who rose up in two eastern provinces.

Read MoreTank column crosses from Russia into Ukraine: Kiev military

The past week has seen the truce deteriorate, after the rebels staged elections and inaugurated leaders, steps Kiev said violated a Sept. 5 peace agreement.

Western countries believe Russia aims to establish a "frozen conflict": a separatist enclave similar to breakaway regions its troops have protected in much smaller ex-Soviet republics Georgia and Moldova for two decades.

That would make it more difficult for Ukraine to achieve its goal of joining the EU and weigh on efforts to revive an economy shattered by a year of political turmoil and war.

Kiev's fear is that Russia will try to expand the territory controlled by the separatists with another military push like one that turned the war's tide in the rebels' favor in August.

Read MoreUkraine: The pain is far from over

The immediate economic concern for Ukraine is the currency, as the sharp fall imperils its banks. The central bank abandoned its unofficial peg last week after spending $1.3 billion, around a tenth of its remaining reserves, to defend the hryvnia in the past month and a half.

"They're trying to show us that we have a floating exchange rate, but I prefer the term 'sinking' ... the market is in a phase that could be classified as panic-mode," a banker for a foreign bank's subsidiary in Ukraine told Reuters.

Go here to see the original:
Ukraine's currency plunges as fears grow