Ukraine gross reserves inch up 0.5% to USD 18.7 bln in October

Ukraine’s gross international reserves inched up 0.5%
(USD 98 mln) to USD 18.7 bln, driven by the placement of local Eurobonds (USD
170.3 mln) and swap operations (worth USD 100 mln), the National Bank of
Ukraine (NBU) reported on Nov. 7. Also USD 147.2 mln was spent on ForEx
interventions, while USD 30.9 mln was allocated on debt servicing needs. By the
end of October, gross reserves covered 3.7 months of future imports.

Alexander Paraschiy: The swaps
and local Eurobonds prevented gross reserves from falling last month, but they
will start falling actively this month. In November-December, Ukraine will have
to repay USD 604 mln to the IMF, including USD 84 mln in interest, and USD 651
mln in local Eurobonds. 

Also, the central bank will have to spend more on
ForEx interventions amid mounting depreciation pressure on the heel of swelling
budget spending. Making things harder, a possible source of relief, the next
IMF loan tranche, has been delayed till 2018. Indeed a rollover of local
Eurobonds is the only available source to prevent gross reserves from sharply
falling in the next few months. Against this backdrop, we project gross
reserves will slide to USD 18.0 bln by the end of 2017.