16:21 06.08.2019

Ukraine's forex reserves expand by 5.8% in July

2 min read
Ukraine's forex reserves expand by 5.8% in July

Ukraine's forex reserves in July 2019 grew by $1.2 billion or 5.8%, to $21.84 billion thanks to net purchase of currency on the interbank currency market by the National Bank of Ukraine (NBU), according to preliminary data posted on the central bank's website.

According to the report, the favorable situation in the foreign exchange market, which has arisen in connection with an increase in nonresidents' interest in hryvnia government domestic loan bonds, as well as the preservation of a positive pricing environment for Ukrainian exports and moderate volumes of imports, led to a significant excess of foreign currency supply over demand.

In July, the NBU replenished international reserves through interventions in the interbank foreign exchange market for a total of $1.271 billion. In particular, the NBU bought $405.2 million through interventions at the best exchange rate and $865.9 million at a fixed rate. The NBU did not carry out any interventions on the sale of currency last month.

In July, proceeds from the placement of government bonds denominated in foreign currency amounted to $1.006 billion. These revenues almost completely offset government payments for servicing and paying off state and state-guaranteed debt in foreign currency. Last month, such expenses amounted to $1.019 billion, of which $941.3 million was spent on servicing and repaying foreign currency government bonds, and the rest was spent on fulfilling other obligations to foreign creditors and international financial institutions.

The size of international reserves was also influenced by a decrease in the value of financial tools (changes in market value, hryvnia to foreign currencies) by $56.6 million, the NBU reported.

As of August 1, 2019, the volume of forex reserves covers 3.4 months of Current External Payments (CXP), which is sufficient to fulfill Ukraine's obligations and current operations of the government and the NBU.

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