In December 2019 alone, the reserves increased by more than 15% / Photo from UNIAN
The National Bank bought back excess foreign currency to replenish the international reserves, letting the Ukrainian hryvnia strengthen freely.
Ukraine's international reserves in 2019 grew by 22% to US$25.3 billion as of January 1, 2020, having hit a seven-year high recorded in December 2012.
The growth of the reserves became possible due to the continued favorable situation on the forex market, in particular, the further acceleration of economic growth and a steady flow of foreign capital into the country, the National Bank of Ukraine (NBU) said on its website.
Read alsoUkraine's hryvnia continues weakening
The NBU noted that the buildup of the international reserves had occurred during the year of presidential and parliamentary elections against the backdrop of peak payments on foreign debt. The country's central bank considers this to be additional evidence of strengthening macro-financial stability.
In addition, a high level of currency supply on the interbank market over the past year was provided by Ukrainian exporting companies, primarily farmers, who, in the face of deteriorating conditions of trade on global markets, boosted sales, as well as by foreign investors who sold US$4.3 billion to buy hryvnia-denominated government domestic loan bonds.
In turn, the National Bank bought back excess foreign currency to replenish the international reserves, letting the Ukrainian hryvnia strengthen freely.
Thus, the regulator's net purchases of foreign currency totaled US$7.9 billion during the year, which is the highest amount in the past 14 years.
In December 2019 alone, the reserves increased by more than 15%, or by US$3.37 billion. At the same time, the government allocated US$220.3 million to service and repay state debt in foreign currency. These expenses were offset by US$514 million earned from the placement of government domestic loan bonds.
As a result of the revaluation, the cost of financial instruments in December 2019 increased by US$143.6 million.
The current volume of the reserves covers 3.9 months of future imports and is sufficient to fulfill Ukraine's obligations, the regulator said.
UNIAN memo. Ukraine's international reserves in 2018 expanded by 10.6%, to US$20.820 billion, updating a five-year high. In October, the National Bank improved its forecast for Ukraine's international reserves as of 2019 to US$22.9 billion against the previously projected US$21.7 billion.