NBU sheds more light on Novembers reserve loss

An NBU representative said yesterday that of November’s USD 1.75 bln loss in reserves, USD 1.0 bln was due to FX revaluation as major reserve currencies fluctuated vs. the US dollar, according to Reuters. The NBU’s net FX sale interventions were USD 0.7 bln last month (vs. USD 1.5 bln in October), of which USD 0.3 bln were sold directly to Naftogaz (NAFTO). Vitaliy Vavryshchuk: The explanation still does not look fully plausible given that EUR and GBP, the NBU’s preferred reserve currencies (along with USD), depreciated by 2.4-3.0% vs. USD last month and should not have caused such a substantial decline in reserves. Yet, the key positive message from yesterday’s clarification was that local net FX demand subsided substantially last month. We do not expect any major change in the trend in the coming months as the FX supply should be supported by the recent upsurge in agricultural product exports.