Ukraine gross reserves rise 1.3% in April

Ukraine’s gross international reserves rose 1.3% m/m,
or USD 229 mln, to return to February’s level of USD 18.4 bln, the National
Bank of Ukraine (NBU) reported on May 5. Currency purchases on the ForEx,
coupled with receipts from a local Eurobond placement, exceeded repayments on
foreign currency-denominated state debt during the month.

During April, the NBU’s net currency purchases on the
ForEx amounted to USD 302.7 mln following its 2Q18 plans for average daily currency purchases of USD 10 mln.
Amid monthly appreciation of the national currency by 0.8%, the National Bank
bought USD 146.0 mln via the interventions “at the best exchange rate,”
USD 80.0 mln via interventions “at a single exchange rate”, and USD 100.7 mln
via currency auctions. At the same time, the NBU sold USD 24.0 mln via the
intervention “at the best exchange rate”. The placement of local Eurobonds
restocked reserves by EUR 83.6 mln.

At the same time, payments related to FCY-denominated
state debt and servicing withdrew USD 127.4 mln from reserves during the month.
In particular, local Eurobond servicing amounted to USD 30.8 mln.

The NBU also reported on a securities revaluation at
USD 59.2 mln (adjustment to market value and currency exchange rate) and “other
operations” at USD 11.3 mln, which apparently had an overall negative effect on
reserves.

By the end of April, gross international reserves
covered 3.3 months of future imports.

Evgeniya Akhtyrko: April’s growth was in line with our projections and we expect they will drop again in May.
FCY-denominated debt repayments are scheduled for this month at around USD 584
mln, including an IMF loan payment, a local Eurobond redemption and coupon
payments. The only source of reserves replenishment will be the central bank’s
currency purchases on the ForEx, which we estimate at USD 250-300 mln. That
said, we expect gross reserves to drop 1.5% in May.