Ukraine gross reserves increase 3% in April

7 May 2020

Ukraine’s gross international reserves increased 3.1% m/m to USD 25.7 bln in April after dropping 7.8% m/m in March, the National Bank of Ukraine (NBU) reported on May 7. The growth was mostly due to the NBU’s purchase of foreign currency at Ukraine’s forex market. The net purchase of foreign currency by the NBU in April amounted to USD 679 mln (vs. USD 2.2 bln in net sales in March). The central bank noted that demand for foreign currency declined in April after panic-buying in the prior month.


In April, the redemption and servicing of foreign currency debt required USD 304 mln (in the equivalent). In particular, payments on local and international Eurobonds amounted to USD 127 mln and USD 78 mln respectively. The rest of the payments involved obligations to other international creditors and financial institutions. These outlays were partially compensated by receipts from the placement of local Eurobonds for USD 164 mln.


The NBU also reported a USD 232 mln rise in the value of its securities portfolio. As of May 1, Ukraine’s gross reserves amounted to 4.5 months of imports, the NBU said.


Evgeniya Akhtyrko: The intensified purchase of foreign currency by the NBU, which resulted in reserves growth,  was in line with our forecast. The clean up of the banking system, fiscal consolidation, and the transition floating exchange rate – all of which were undertaken after 2014 – helped to withstand the initial crisis shock effectively and to avoid the dramatic loss of reserves and depreciation of the national currency, which were typical for previous crisis episodes in Ukraine.


In May, Ukraine’s outlays in foreign currency will be high. They will include the redemption and servicing of U.S.-guaranteed Eurobonds of USD 1,009 mln, the redemption and servicing of local Eurobonds of USD 334 mln and repayments to the IMF of about USD 320 mln. These outlays are likely to be partially compensated by the purchase of foreign currency by the NBU. With all the ins and outs, reserves are likely to lose around 3% in May. 

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