Ukraine gross reserves drop 8% in March

Ukraine’s gross international reserves dropped 7.8%
m/m to USD 24.9 bln in March, the National Bank of Ukraine (NBU) reported on
Apr. 7. The decline was mostly due to the NBU’s interventions on the foreign
currency market aiming to smooth out the excessive demand caused by panic
buying by businesses and individuals.

The net sale of foreign currency by the NBU in March
amounted to USD 2.2 bln. The central bank noted that the situation at the forex
normalized at the end of the month, allowing the regulator to return to the
purchase of foreign currency.

In March, the redemption and servicing of foreign
currency debt during the month required USD 1.1 bln. In particular, payments on
international Eurobonds amounted to USD 537 mln, while obligations to the IMF
totaled USD 409 mln. The rest of the payments involved obligations to other
international creditors and financial institutions.

The NBU also reported a USD 17 mln rise in the value
of its securities portfolio. As of Apr. 1, Ukraine’s gross reserves amounted to
3.7 months of imports, the NBU said.

Evgeniya Akhtyrko: The panic
dollar buying amid the growing uncertainty related to the coronavirus pandemic
returned Ukraine’s gross reserves to a level close to the beginning of the
year. The high level of reserves helped to boost the central bank’s confidence
and satisfy the excessive demand for foreign currency.

If the situation at Ukraine’s forex remains
favorable in April, the NBU has a chance to replenish reserves through the
purchase of foreign currency. The major foreign currency outlays in April
include the redemption of local Eurobonds for USD 120 mln and an IMF payment of
around USD 30 mln.