NBU turns into net FX buyer in December

The National Bank of Ukraine purchased net USD 200 mln on the interbank FX market month-to-date, a chief advisor to the NBU governor said yesterday. The NBU’s gross international reserves stood at USD 32 bln as of December 29, implying a 1.2% decline since the beginning of the month. Vitaliy Vavryshchuk: The comments from the NBU official indicate FX market pressure has eased substantially in December, which we take as a signal hryvnya depreciation expectations among businesses and the population remain muted. Also contrary to broad market expectations, NBU reserves remained little changed – USD 600 mln of the outflow related to the government’s Eurobond redemption and an estimated USD 500 mln in FX revaluation loss were to a great extent offset by USD 413 mln in proceeds from the sale of USD-denominated bonds and NBU currency purchases from the market. Given the trend on the FX market in December, we remain comfortable with our view that the NBU has a good chance of keeping the hryvnya largely stable vs. the US dollar in 2012.