Ukraine gross reserves reach nine-year maximum

Ukraine’s gross international reserves increased by USD
2.7 bln, or 9.2% m/m, to USD 31.6 bln in August, reaching a nine-year maximum,
the National Bank of Ukraine (NBU) reported on Sept. 7. The growth was prompted
by a payment from the IMF in the form of SDR allocation,
as well as the NBU’s interventions at Ukraine’s ForEx market.

 

In August, Ukraine received SDR 1.9 bln (the
equivalent of USD 2.7 bln) as a result of the IMF payment in the form of SDR allocation.
The net purchase of foreign currency by the NBU at the ForEx market amounted to
USD 483 mln.

 

At the same time, the government spent USD 188 mln for
the redemption and servicing of debt in foreign currency, while the receipts
from the placement of local Eurobonds during the month amounted to USD 9 mln.
In addition, Ukraine’s repayments to the IMF amounted to USD 204 mln in August.

 

The NBU also reported a USD 32 mln decline in the
value of its securities portfolio.

 

As of Sept. 1, Ukraine’s gross reserves amounted to
4.4 months of imports, the NBU said.

 

Evgeniya Akhtyrko: Abundant
reserves create a good safety cushion for going smoothly through upcoming
payments in foreign currency.

 

In September, Ukraine’s outlays in foreign currency
will be high. On Sept. 1, the government paid USD 1.3 bln on its Eurobonds.
In addition, the payments during the month will include the redemption of a USD
1,000 mln U.S.-guaranteed bond and USD 111 mln of coupons on 2032 Eurobonds, as
well as around USD 500 mln repayments to the IMF.

 

Partially, these outlays will be compensated by
receipts from the placement of local Eurobonds during the month. If the
situation on Ukraine’s ForEx remains favorable, the NBU might continue its
purchases of foreign currency.

 

With all these ins and outs, Ukraine reserves are
likely to lose around 8%-9% in September. Therefore, the impressive build-up
achieved in August will melt.