Ukraine had USD 22,756.9 million in international reserves as of 1 July 2022, preliminary data show. International reserves declined by 9% in June due to the sale of foreign currency in the interbank FX market. Increased international aid inflows to Ukraine partially made up for the NBU’s interventions.
Overall, international reserves dynamics in June were driven by:
- first, the NBU’s transactions in the interbank FX market.
The NBU sold USD 3,987.3 million and bought USD 31 million in the FX market. As a result, the NBU was a net seller of USD 3,956.3 in foreign currency in June.
The sale of foreign currency to meet the excess of FX demand over supply led to a significant drawdown of international reserves. Specifically, FX inflows from exports of goods and services and labor migrant remittances were surpassed by significant FX expenditures on defense, imports, and settlements with international payment systems as Ukrainians made purchases abroad with Ukrainian-issued hryvnia cards.
Another factor that drove up demand in the FX market was the monetary financing of the state budget deficit by the NBU. Most of the hryvnia financing received by the government gradually found its way into the FX market, fueling additional demand for foreign currency.
- second, transactions to manage public debt.
A total of USD 2,763.0 million in FX inflows was credited to the government’s accounts with the NBU. Specifically, USD 967.4 million came in from the World Bank, USD 779.0 million from the Canadian government, USD 479.4 million from the Japan International Cooperation Agency, and USD 354.2 million from the issuing of FX domestic government debt securities.
On the other hand, the government spent a total of USD 833.6 million on the servicing and repayment of FX public debt. That includes the USD 672.1 million that went towards the servicing and repayment of domestic government debt securities, and the USD 70.1 million allocated for the servicing of external public debt. The rest of the funds went to meet FX commitments to other creditors.
In addition, the NBU repaid USD 166.2 million to the IMF.
- third, the revaluation of financial instruments due to changes in their market value and exchange rate fluctuations. These instruments fell in value by USD 152.2 million in June.
Data on international reserves and FX liquidity are compiled and published on a monthly basis:
- for preliminary data, no later than on the seventh day after the reporting month ends
- for revised data, no later than on the 21st day after the reporting month ends.
Revised data are available here.
Data on Ukraine’s international reserves are presented in the U.S. dollar equivalent.
Russia’s ongoing full-scale military aggression against Ukraine has made it difficult to forecast macroeconomic indicators. The NBU is therefore temporarily refraining from publishing data on how much of future imports can be covered by international reserves.