Ukraine gross foreign reserves increase 2% in May

Ukraine’s gross international reserves increased 2.2%, or by USD 296 mln, to USD 13.5 bln in May, the National Bank of Ukraine (NBU) reported on June 7. The main factors were ForEx interventions – in which the NBU purchased USD 332.7 mln net in May – and the sale of local Eurobonds for USD 271.1 mln. As tradition, spending concentrated on debt servicing, which reached USD 176.8 mln in May. By the month’s end, gross international reserves reached 3.4 months of imports. 

Alexander Paraschiy: Improved external accounts have had a positive impact on foreign cash inflow to Ukraine. In May, NBU purchases of foreign cash halved from USD 676 mln a month ago. However, the inflow still remains substantial. In light of the NBU continuing to make foreign currency purchases in early June, we can say that gross reserves will keep growing this month too. The signed agreement for USD 1 bln in loan guarantees from the U.S. government, as well as a potential IMF wire in July, also promises further gross reserves accumulation. Since the tendency is in line with our initial estimates, we are keeping our forecast for gross international reserves at USD 18 bln by the year end.