Ukraine gross international reserves drop 0.5% in October

Ukraine’s gross international reserves dropped 0.5% m/m to USD 15.5 bln in October, despite interventions at the ForEx and a local Eurobonds placement, the National Bank of Ukraine (NBU) reported on Nov. 7. For the interventions, the NBU purchased USD 274.5 mln in October. Meanwhile, the Eurobonds raised EUR 141.3 mln locally. Foreign currency spending was substantial as USD 365.8 mln was allocated on debt servicing. By the end of October, gross reserves were enough to cover nearly 3.7 months of imports.

Alexander Paraschiy: As we mentioned last month, we do not expect much debt inflow after Ukraine raised USD 1.0 bln from the IMF and USD 1.0 bln from Eurobonds in September.  The only potential source for boosting gross reserves is EUR 600 mln of macro-financial support from the EU, which was committed to be paid upon Ukraine’s lifting of a ban on timber exports.

Ukraine was also granted a USD 500 mln loan guarantee to Naftogaz (from the World Bank), but those funds will be spent immediately for a natural gas purchase and will not be reflected in gross reserves. All in all, the current gross reserves tendencies, as well as anticipated capital inflow, promise a year-end result of USD 16.1 bln in reserves, as we estimated previously.