Ukraine's international reserves shrink by 8.7% in Sept

The National Bank of Ukraine (NBU) says the country's international reserves in September 2020 shrank by 8.7%, to US$26.5 billion.

In September, the reserves decreased due to the period of peak debt payments on the state's external liabilities, the regulator's press service said on its website on October 7.

Read alsoOver 50% of entrepreneurs wary of economic crisis – pollIn general, the dynamics of reserves during the months were determined, in particular, by government operations to manage public debt.

"Total payments to service and repay the public and government-guaranteed debt, estimated in the foreign currency, amounted to US$2.665 billion (in the equivalent). In particular, US$2.211 billion was spent on servicing and redeeming eurobonds, US$417.4 million on fulfilling liabilities to the IMF, while the remaining funds were used to meet the state's other obligations in foreign currency. At the same time, forex earnings in favor of the government stood at US$445 million (in the equivalent), including US$111.9 million from the placement of government domestic loan bonds," the repress service said.

The NBU's operations on the interbank forex market also influenced the dynamics of the reserves. In September, demand for foreign currency exceeded supply due to the revival of business activities, in particular, those of importers and companies that were buying foreign currency to pay off foreign debts.

"To smooth the fluctuations, the National Bank entered the market with interventions to sell foreign currency, which amounted to US$231.5 million within the month," the report said. "On certain days, when there was an excess supply of foreign currency on the market, the National Bank replenished its reserves and, as part of such interventions, it acquired US$34 million."

The financial instruments were also revalued downwards by US$105.7 million in the equivalent over changes in their market value and exchange rates.

"The current volume of the international reserves covers 4.3 months of future imports, which is sufficient to meet Ukraine's liabilities and the current operations of the government and the National Bank," the regulator added.

Ukraine's international reserves

• In August 2020, the country's international reserves grew by 1%, to US$29.05 billion, according to preliminary data.
• Ukraine's international reserves in 2019 rose by 22%, to US$25.3 billion as of January 1, 2020, having hit a seven-year high since December 2012.