NBU reserves decline to 2.8 months of imports as of end-December
8 January 2013
Ukraine’s gross international reserves fell 3.3% (USD 830 mln) to USD 24.6 bln in December (2.8 months of future imports), bringing the year’s decline to USD 7.25 bln (-22.8% YTD), according to data released on Jan. 4 by the National Bank of Ukraine (NBU).
Alexander Paraschiy: The December decline in gross reserves came as a real surprise. Monetary authorities have claimed that excessive currency demand has subsided with the warning of a possible 10% foreign cash sales tax. The hryvnia even strengthened 1.5% over the month as the NBU signaled that it’s buying back foreign currency from the market. Yet reserves slid USD 830 mln in December nevertheless. This strange play by the authorities is further evidence that finances are worsening and an IMF loan is critical already by February. In our base-case scenario, we expect gross reserves to decline modestly by nearly USD 3 bln to USD 21.2 bln (2.4 months of imports) in 2013, but the IMF standby program would be crucial for such a positive outcome.
