Reserves grew during the month thanks to the government’s successful placement of Eurobonds.
Overall, changes in international reserves during the month were driven by the following factors:
- first, the government’s servicing of public debt. FX earnings for the benefit of the government in July were USD 1,750.0 million, including USD 1,128.7 million on the account of sovereign Eurobond placement and USD 608.2 million – FX domestic government debt securities placement. At the same time, the government spent USD 1,500.3 million (in the equivalent) on servicing and repaying public debt denominated in foreign currency. Of that amount, USD 767.0 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 USD 498.7 billion. 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 USD 130.0 million.
- third, the revaluation of financial instruments (due to changes in their market value and in FX rate). Last month, their value increased by USD 406.3 million (in the equivalent).
International reserves now 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.
As Ukrinform reported, as of July 1, 2020, Ukraine's international reserves, according to preliminary data, amounted to USD 28.5 billion (in equivalent).
NBU Governor Kyrylo Shevchenko said in a video address that Ukraine's international reserves may grow to about USD 30 billion by the end of 2020, and to USD 32-33 billion in the next years.
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