Eurobond sale boosts July NBU gross reserves 3% mom

The NBU’s gross international reserves were up 2.6% mom in July to USD 30.1 bln (down 5.4% YTD), according to a statement yesterday from the central bank. The NBU added USD 2.0 bln in proceeds from the sovereign Eurobond sale in July and sold net USD 1.2 bln (partly direct to Naftogaz) to support hryvnia stability.

Vitaliy Vavryshchuk: The fact the Naftogaz purchased foreign currency from the NBU in July ia a surprise. A USD 2.0 bln advance payment from Gazprom for gas transit services and a USD 2.0 bln loan from Gazprombank should have alleviated Naftogaz’s need to buy FX from the central bank. We therefore assume the money hasn’t yet arrived at Naftogaz’s accounts. If that is the case and Naftogaz is still to receive the funds, it would keep the monopoly out of the market in the coming months and ease hryvnia devaluation pressures. At this point, we maintain our end-2012 projection for reserves at USD 23 bln (down 27% yoy). The projection includes an estimate of about USD 4.0 bln spent on market interventions and USD 2.0 bln on repaying IMF debt.