NBU spends USD 223 mln to support hryvnia in February

The NBU spent USD 223 mln for forex interventions to maintain the USD-hryvnia exchange rate in February, according to NBU data released on March 12.

Alexander Paraschiy: For the second month in a row, the NBU provided contradictory information. On the one hand, the NBU reported continued interventions, spending USD 520 mln from gross reserves in 2M13. On the other hand, gross reserves keep growing, increasing 0.7% (USD 164 mln) in 2M13 to USD 24.71 bln. While the euro’s strengthening could be the reason for January’s reserves increase, we have no explanation as to what might have boosted gross reserves to offset February’s currency intervention. We expect such interventions will continue – amidst a simultaneous 10% hryvnia devaluation – throughout the year, at an annual cost to the NBU of nearly USD 4.0 bln, pulling gross reserves down to USD 20.7 bln.