NBU reserves gain 0.2% in February

Gross international reserves of the National Bank of Ukraine increased 0.2% mom (USD 58 mln) to USD 24.71 bln in February, or 2.8 months of future imports, as reported on March 6 by an NBU official.

Alexander Paraschiy: The minor gross reserves increase in February is in line with our estimates. The USD 1.0 bln Eurobond placement on Feb. 4 enabled the government to cover a USD 998 mln redemption to the IMF, which is what prevented a foreign currency deficit during the month. The state hasn’t released info on individual cash demand and the trade balance so far. But we do not expect those items to be significantly negative in view of abated devaluation sentiments in the market and an estimated gas imports decline in February due to much warmer weather than a year ago. Further on though, we expect gross NBU reserves to resume moving downward. A lot will depend on IMF talks which should continue in March. However, even in the case of available external funding, we still expect a growing trade deficit to keep pressure on the local currency. By the year’s end, we expect gross reserves to decrease to USD 20.7 bln.