REUTERS

Ukraine's international reserves grew by 1% in July and stood at US$28.802 billion as of August 1, 2020, having hit an eight-year high since the autumn of 2012.

Reserves were growing throughout the month thanks to the government's successful placement of eurobonds, as reported by the National Bank of Ukraine (NBU).

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Overall, changes in international reserves were driven by the following factors:

  • First, the government's servicing of public debt. Forex (FX) earnings for the benefit of the government in July were US$1.75 billion, including US$1.12 billion on the account of sovereign Eurobond placement and US$608.2 million – FX domestic government debt securities placement. At the same time, the government spent US$1.5 billion on servicing and repaying public debt denominated in foreign currency. Of that amount, US$767 million were paid for hryvnia-denominated domestic government debt securities, while the rest was paid to discharge obligations to foreign lenders;
  • Second, the NBU's FX interbank transactions In July, demand for currency on interbank FX market somewhat exceeded supply, thus the NBU renewed interventions to sell foreign currency and alleviate excessive fluctuations. Last month interventions amounted to US$498.7 million. At the same time, on some days the situation on the FX market was favorable and the NBU encouraged replenishment of reserves on the account of purchased FX currency. Overall, such interventions amounted to US$130 million; and
  • Third, the revaluation of financial instruments (due to changes in their market value and in FX rate). Last month, their value increased by US$406.3 million.

Currently, international reserves cover 4.9 months of future imports. This is sufficient for Ukraine to meet its obligations, and for the government and the NBU to conduct their current operations, the regulator said.

Background

The country's international reserves as of July 1 totaled US$28.516 billion, which was 12.4% up from the figure reported as of June 1.

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 since December 2012.