NBU Reserves Near USD 22bn, Highest Level Since July 2013

December 09, 2019

Ukraine’s foreign currency reserves increased by USD 530mn (+2.5% MoM) to USD 21.93bn in November, the National Bank of Ukraine said on Dec 6. The November increase brought the reserves up by 5.4% year-to-date. The NBU said November’s rise occurred thanks to net forex purchases of USD 898mn on the interbank market amid a steady supply of foreign currencies. The regulator did not intervene the market with any forex sales last month.   
In terms of outflows, the NBU transferred USD 645mn to the government for servicing foreign-currency denominated debt, and MinFin redeemed EUR 426mn of domestic EUR-bonds. Also there was a USD 84mn interest payment to the IMF in November. 

Ukraine’s forex reserves at the end of November represent the highest level since July 2013. A generally favorable situation on the interbank market driven by inflows of hard currency from offshore investors buying Ukrainian high-yield UAH domestic bonds were the primary reason for the National Bank’s ability to replenish the reserves.  
Although the hryvnia performed strongly last week, we believe that the problems which Ukrainian steelmakers are now facing on global markets will spark a reduction in the export proceeds which have been helping to boost the hryvnia this year. We expect a notable hryvnia retreat before the end of the year of 5-7%, back to the 25-25.50 UAH/USD range where it had spent most of 2019.
The latest NBU figures indicate that Ukraine’s currency reserves now roughly cover the equivalent of 3.4 months of merchandise imports, which is above the minimum 3 months safe level to maintain trouble-free foreign trade. 


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