Ukraine gross reserves stay at USD 20.8 bln in January

Ukraine’s gross international reserves stayed unchanged
in January at USD 20.8 bln, the National Bank of Ukraine (NBU) reported on Feb.
6. Foreign currency outlays related to net debt repayments were compensated by
foreign currency purchases by the NBU on Ukraine’s ForEx.

The NBU reported that government payments in foreign
currency on debt repayment and servicing amounted to USD 883.9 mln (in the
equivalent), including USD 808.1 mln on the redemption and servicing of local
Eurobonds. These outlays were partially compensated by new local Eurobond placements
for USD 620.7 mln.

In addition, international reserves during January
were replenished through the purchase of foreign currency by the NBU at
Ukraine’s ForEx. The net purchase of foreign currency amounted to USD 136.1
mln. The NBU also reported on the increased value of its security portfolio by
USD 126.3 mln (adjusted to market value and exchange rate).

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

Evgeniya Akhtyrko: The
relatively stable situation at the ForEx helped the NBU to compensate currency
outlays related to debt redemption despite its difficulties in attracting new
local debt in foreign currency during the month.

In February, Ukraine’s government will face high debt
repayments in foreign currency. It will have to repay around USD 440 mln to the
IMF and USD 745 mln to the holders of local Eurobonds. These outlays will be
partially compensated by expected inflow of USD 600 mln from international
borrowing in February that will be secured by a guarantee of the World Bank, as reported by the Finance Ministry.

At the same time, the foreign currency inflow from the
new placements of local Eurobonds are not likely to be essential, as the latest local bond placement
revealed the low capacity of local market players to generate foreign currency
inflow through the purchase of local Eurobonds.

February’s level of reserves will largely depend on
the amount of foreign currency the NBU will buy at ForEx during the month. The
current appreciation of the UAH/USD exchange rate (2.7% ytd) gives the central
bank a solid opportunity to replenish its reserves this way. All and all, we
expect the balance of foreign currency flows in February will be negative, and
gross reserves are likely to lose USD 0.1-0.2 bln.