NBU reserves improved slightly in January

Gross international reserves increased 0.4% (USD 105 mln) to USD 24.65 bln in January (2.8 months of future imports), according to NBU data released on Feb 7. A month earlier, the NBU reported a USD 830 mln decline in reserves.

Alexander Paraschiy: The slight change in gross reserves in January was in line with our expectations. The traditional seasonal improvement of the trade balance at the year’s start prevented a fast decline in gross reserves. The euro’s rapid strengthening in January also contributed to a gross reserves build up since a large part of reserves is denominated in euros. What’s more, USD 410 mln in redemptions to the IMF (paid on Jan. 30) had been offset by a USD 500 mln Eurobonds placement by Ukreximbank.

As a result, gross reserves stood almost flat vs. December. In February, we are also unlikely to see any significant gross reserves change since Minfin managed to raise USD 1.0 bln to pay back USD 1.0 bln to the IMF this month. However, pressure on reserves might strengthen in the future, especially if new IMF agreement is delayed. Not counting on such a scenario, we expect Ukraine to be able to rollover its debt – at least partially – and gross reserves to stay above USD 20.7 bln till the year’s end.