NBU reserves shrink USD 0.9 bln mom in May
8 June 2012
The National Bank of Ukraine’s gross international reserves were down 2.9% mom (USD 0.9 bln) in May to USD 30.8 bln, according to NBU data from yesterday. NBU reserves have declined 3.3% YTD.
Vitaliy Vavryshchuk: We estimate reserves fell some USD 0.7-0.8 bln due to FX revaluation effect as the Euro weakened vs. the US dollar 6.6% mom in May. Factoring in USD 0.56 bln that the Finance Ministry raised via the sale of FX-denominated local t-bills, we estimate the NBU sold some USD 0.6-0.7 bln on the interbank market last month to support hryvnya stability. May was the first month since February when NBU reserves declined, which we think can be attributable to weaker external debt inflows to the economy. We think the local FX market should see a material relief in June as the Euro-2012 championship will trigger FX inflows to Ukraine. Additionally, Naftogaz should have sufficient funds to pay for gas supplies this month and next after Gazprom yesterday granted a USD 2.0 advance payment for gas transit services to be provided through end-2012. Yet, we think pressure the on hryvnya will heighten by end-summer as the situation in global commodity and debt capital markets remains challenging. The NBU stays committed to prevent any major fluctuations in the UAH:USD rate, but we think it is becoming more and more likely it will let the hryvnya depreciate by 4-5% by end-2012.
