Ukraine gross reserves decrease 1% in February

Ukraine’s gross international reserves decreased by
USD 0.28 bln, or 0.96% in February 2021, the National Bank of Ukraine (NBU)
reported on Mar. 5. The decline was mostly a result of the net repayment of
state foreign currency debt.

In particular, the government spent USD 634 mln for
debt repayment and servicing, which was partially offset by the placement of
USD 457 mln in local Eurobonds. The NBU didn’t sell the currency on Ukraine’s
forex market in February, while the purchase amounted to UAH 200 mln. The NBU
also reported a USD 88 mln decrease in the value of its securities portfolio.

As of Feb. 1, Ukraine’s gross reserves amounted to 4.6
months of imports, the NBU said.

Evgeniya Akhtyrko:  The
decline of gross reserves in February was in line with our expectations. The
receipts from new placements of local Eurobonds were almost sufficient to roll
over the redemption and servicing of local bonds during the month, while the
repayments of the external debt called for the use of reserves.

In March, Ukraine will face relatively high outlays in
foreign currency. Firstly, the country’s payment to the IMF will amount to
around USD 510 mln. Secondly, the redemption of local Eurobonds on March 31
will call for USD 325 mln. These outlays will be partially covered by receipts
from three local Eurobonds placements scheduled in March. In addition, the NBU
might intensify the purchase of foreign currency on the forex market if appreciation
pressure strengthens.

In the absence of new borrowings abroad, Ukraine’s
gross international reserves are likely to lose around 1% in March.