NBU props up hryvnia with USD 0.3 bln intervention in January

The National Bank of Ukraine (NBU) spent USD 296.4 mln in January from its gross reserves to support Ukraine’s national currency, according to NBU data released on Feb. 14. Net currency purchases for individuals amounted to USD 200 mln over the month, down 3.2x mom.

Alexander Paraschiy: This data is in line with our interpretation of the recent growth in gross foreign reserves (by 0.4%, or USD 105 mln, to USD 24.6 bln). If the euro hadn’t strengthened last month, gross reserves would have fallen USD 300 mln. The decline in individual currency purchases prompted less active interventions. However, this temporary ease in the currency market did not soothe the ongoing balance of payments problem and, subsequently, the currency deficit. We still expect gross reserves will not break the dangerous ceiling of USD 20 bln by the year’s end, but this outcome strongly depends on a controlled devaluation over the coming months.