Ukraine foreign reserves fall 12% to USD 5.6 bln in February

The gross international reserves of Ukraine fell USD 795 mln, or 12.4%, to USD 5.6 bln in February, the National Bank of Ukraine (NBU) reported on March 5. The main reasons were foreign currency debt redemptions and servicing (USD 539 mln), as well as interventions on the ForEx market (USD 651 mln). At the same time, the NBU managed to buy up USD 145 mln from the market and MinFin managed to place USD 298 mln in USD-denominated local bonds, somewhat offsetting the month’s contraction.

Alexander Paraschiy: Gross international reserves are falling much stronger than we expected, with steady, high ForEx interventions as the main reason. The NBU did not offer details for what purposes the interventions were allocated for but we assume a major part was used to support Naftogaz accumulating foreign currency for natural gas imports, as usual.

In March, we expect gross reserves to get a booster shot from an anticipated IMF loan, which is expected after its executive board meeting on March 11. We do not have any idea of how large the first wire might be (the total four-year lending plan is USD 17.5 bln, according to the preliminary parameters), with estimates ranging between USD 5 bln and USD 10 bln and the lower end looking much more realistic to us. We expect a substantial replenishment of gross reserves by the year end, up to USD 11.5 bln.