Ukraine gross reserves decline 0.5% in April

Ukraine’s gross international reserves declined 0.5%
m/m, or USD 0.1 bln, to USD 20.5 bln in April after rising 2.0% m/m in the
previous month, the National Bank of Ukraine (NBU) reported on May 6. The
payments related to FCY-denominated debt exceeded receipts from the new debt
placement and foreign currency purchases by the central bank on Ukraine’s
ForEx.

In April, the government spent USD 882 mln (in the
equivalent) on repaying and servicing the debt in foreign currency. In
particular, the redemption and servicing of local Eurobonds required USD 710
mln. In addition, USD 78 mln was spent on servicing international Eurobonds.
The rest included debt repayments to international organizations.

These outlays were partially compensated by receipts
from the placement of local Eurobonds for USD 417 mln and EUR 2.6 mln. In
addition, the net purchase of foreign currency by the central bank amounted to
USD 300 mln. The National Bank reported an increase in the value of its
securities portfolio of USD 54 mln (adjusted to market value and the currency
exchange rate).

As of May 1, Ukraine’s gross reserves amounted to 3.4
months of imports, the NBU said.

Evgeniya Akhtyrko: A bigger
drop in reserves was avoided mostly due to the favorable situation at the
currency market, which enabled the central bank to intensify its purchases of
foreign currency to replenish reserves. In particular, net foreign currency
purchases in April nearly doubled March’s result.

May will be a peak month in terms of the country’s
payments in foreign currency. Firstly, Ukraine is to redeem USD 1 bln of
U.S.-guaranteed bonds issued in May 2014. Secondly, May’s debt repayments to
the IMF will amount to around USD 450 mln. In addition, the MinFin is to redeem
local Eurobonds for USD 245 mln.

Like in April, the government will be replenishing
foreign currency outlays with the placement of new local Eurobonds and the
purchase of foreign currency at ForEx. With all these ins and outs, gross
foreign reserves are likely to lose at least USD 1 bln in May.