NBU’s Reserves Reach Historic High of USD 24.8 bln in May

The National Bank of Ukraine’s gold and foreign currency reserves amounted to USD 24.8 bln at the end of May (+5.4% mom). Since the beginning of the year, reserves have increased 11.2%, which allows the reserves to cover 5.3 months of imports. Oleksandr Klymchuk: As we previously predicted, the slightly increasing current account deficit is not a threat this year and would be covered by the capital account surplus; excessive inflows would be bought by the NBU to increase its reserves. But the data shows that we were too conservative in estimating the scope of capital inflows into the Ukrainian economy: the NBU’s reserves surged in April-May to USD 24.75 bln, which is by USD 750 mln higher than our yearend target! This positive surprise makes us put FDI and FX reserve forecasts for 2007 under review.