Ukraine September gross reserves drop 9%

Ukraine’s gross international reserves dropped 8.7%
m/m, or USD 2.5 bln, to USD 26.5 bln in September after growing 0.9% m/m in August,
the National Bank of Ukraine (NBU) reported on Oct. 7. The decline was mostly
the result of peak repayment on external debt. Total outlays related to
external debt repayment and servicing amounted to USD 2.7 bln (in the
equivalent).

In particular, the redemption and servicing of
international Eurobonds called for USD 2.2 bln. Repayments to the IMF totaled
USD 417 mln. At the same time, foreign currency inflow to government accounts
amounted to USD 445 mln, including the receipts from the placement of local
Eurobonds for USD 112 mln.

The NBU’s net sale of the foreign currency at
Ukraine’s Forex during September amounted to USD 232 mln. The increased demand
for foreign currency was caused by a revival in business activity, as well as
more intense purchases of foreign currency by importers and companies that were
required to repay their foreign debts.

The NBU also reported a USD 106 mln decline in the
value of its securities portfolio.

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

Evgeniya Akhtyrko: The active
build-up of foreign reserves during previous months helped the country get
through smoothly the September peak payments on foreign debt.

Government outlays in foreign currency will be relatively
low in October. In particular, they will include the redemption and servicing
of local Eurobonds for USD 207 mln, as well as repayments to the IMF for around
USD 87 mln. We expect the government will be able to compensate these outlays
with the receipts from local Eurobond placements.

If the situation at Ukraine’s Forex doesn’t call
for significant sales of foreign currency, the NBU’s international reserves in
October are not likely to change significantly.