NBU reserves shrink 1.5% mom in October

The National Bank of Ukraine reported on Friday that its gold and foreign currency reserves decreased 1.5% mom in October to USD 27.7 bln; the reserves decreased by 2.6% mom in both September and August. NBU reserves have declined 12.1% over 10M09. Mykyta Mykhaylychenko:  Notably, NBU interventions on the domestic FX market equaled only USD 302 mln, compared to the monthly average of ~USD 1 bln in 9M09. The NBU has enough reserves to maintain hryvnya exchange rate stability in coming months, though it might allow the hryvnya to depreciate by another 10-15%. After that (in mid-2010), we expect the negative gap between supply and demand on the domestic FX market to narrow when the exchange rate stabilizes.