Ukraine gross reserves rise 2.6% in May
7 June 2017
Ukraine’s gross international reserves rose 2.6%, or USD 443 mln, to USD 17.6 bln, the National Bank of Ukraine (NBU) reported on June 6. The increase was driven by USD 521 mln in net dollar purchases at the ForEx and USD 38 mln from placement of local Eurobonds. Debt servicing decreased the reserves by USD 230.4 mln, including USD 71.8 mln on IMF debt servicing. The current level of reserves covers 3.7 months of future imports.
Alexander Paraschiy: It’s not clear what created the excessive supply of foreign cash at the ForEx amid falling resource prices (iron ore dropped 12.5% in May, according to IMF data), decreasing industrial output (-6.1% in April) and slowing exports proceeds. We suspect individual cash returns to the banking system might be the main source of positive inflow amid recovering confidence on the market. FDI was sluggish in April and is unlikely to improve sharply.
Based on this reading, this tendency can extend itself through the summer months, when individuals traditionally sell foreign cash in the absence of any turmoil. In regards to IFI funding, we expect one more wire from the IMF and we see good chances for a 1.0 bln Eurobond placement in 2H17. Against this backdrop, we maintain our projection of gross reserves at USD 19.5 bln (4.1 months of imports) by the year end.
