Ukraine central bank buys back foreign cash in August

The National Bank of Ukraine (NBU) reported on Sept. 11 that it purchased at the ForEx market USD 45.2 mln more than it sold in August. In particular, it purchased USD 354.8 mln in gross foreign currency during the month. Net individual demand for foreign cash was USD 201.3 mln in August, according to the NBU report.

Alexander Paraschiy: These figures are a pleasant surprise in light of the panic at the ForEx in August. We anticipated the NBU had to spend a few hundred million dollars from its gross reserves to stabilize the exchange rate, while it was buying instead. The demand for foreign cash from households is also much below our expectations. Considering these figures, other factors must have caused gross international reserves to fall USD 238 mln in August. It’s possible that higher interest rates on servicing external debt played a role, and so could have Naftogaz tucking away foreign currency for a USD 1.6 bln Eurobond redemption in September.