Preliminary data suggests that as of 1 January 2017, Ukraine's international reserves amounted to the equivalent of USD 15.539 billion, having increased by 1.8% m-o-m.
In December, USD 607.9 million raised by the Government, including USD 550.4 million in proceeds from the placement of US dollar-denominated domestic sovereign bonds and EUR 55.1 million from the European Commission, also contributed to the increase in international reserves.
At the same time, funds from international reserves were used for the repayment and servicing of public and publicly guaranteed debt denominated in foreign exchange in the amount of USD 140.9 million, including USD 119.8 million in principal and interest payments on USD dollar-denominated domestic sovereign bonds.
In addition, late December was marked by episodes of heightened exchange rate volatility in the interbank FX market. However, the effects of favorable fundamental factors that were at play in keeping inflows of FX proceeds from grain and sunflower oil exports flowing to the interbank FX market were offset by the temporary factors. Accordingly, in the last week of December alone, the NBU held three FX sale auctions through which USD 202.7 million was sold to market participants to meet their demand for foreign currency.
Overall, the NBU purchased USD 115.0 million and sold USD 234.4 million through FX auctions held in December. In December, the NBU’s net FX sales amounted to USD 119.4 million.
Overall, Ukraine’s international reserves increased by USD 2.2 billion or by or by 17%.
The foreign exchange interventions carried out by the NBU were the main contributor to the increase in international reserves. Thanks to a favorable pricing environment on global markets in April-July and inflows of FX proceeds from exports of foodstuffs, the NBU’s net FX purchases have reached USD 1.6 billion since late September.
The disbursement of the third tranche of the third loan tranche in an amount equivalent to USD 1 billion under the IMF’s EFF and related official financing, namely USD 1 billion in proceeds raised by the Ministry of Finance of Ukraine from the placement of U.S.-guaranteed euro bonds also contributed to the increase in reserves.
However, as the NBU warned earlier, the stock of international reserves by the end of 2016 underperformed the NBU’s year-end international reserves forecast published in the Inflation Report for (October 2016). The previous forecast based on the assumption of the successful completion of the third review under the Extended Fund Facility arrangement in 2016. Under the baseline scenario, the NBU expected the third tranche of USD 1.3 to be disbursed by the IMF by the end of 2016. With the disbursement of this tranche and EUR 600 million of related financing from the European Commission by the end of the year, Ukraine’s international reserves could have reached USD 17.5 billion. Accordingly, given the lack of official financing, the stock of international reserves fell short of the forecast by USD 2 billion.
Currently, the amount of Ukraine’s international reserves is sufficient to cover 3.7 months of future imports and enable the Government and the NBU to settle their foreign debt obligations and current operations.
Data on international reserves and foreign currency liquidity are compiled and disseminated on a monthly basis:
- not later than the seventh day following the reporting month – preliminary data;
- not later than the twenty-first day following the reporting month – revised data.