Ukraine's international reserves reach 11-year high

Ukraine had USD 37,311.3 million in international reserves by 1 June 2023, according to preliminary data, reaching the second all-time high since August 2011, Ukraine’s central bank, the NBU, said on Tuesday.

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"International reserves increased thanks to sustainable and regular inflows from international partners, which exceeded the NBU’s net FX sales, and Ukraine’s FX debt repayments," the NBU explained, listing a number of favourable factors.

First, inflows to the government’s accounts, and the servicing and repayment of public debt.

A total of USD 4,322.8 million was received to the government's FX accounts with the NBU. That included

• USD 1,616.0 million of macro-financial assistance from the EU USD;
• USD 1,250.0 million from the United States (through the World Bank's trust fund);
• USD 1,073.7 million from the placement of FX domestic government debt securities;
• and USD 383.1 million from the World Bank.

Ukraine's government spent USD 842.2 million to service and repay FX public debt. That includedUSD 742.3 million in repayments on FX domestic government debt securities and USD 30.1 million to repay the debt to the World Bank. The rest went towards meeting the country's liabilities to other international creditors.

In addition, Ukraine repaid USD 195.5 million to the International Monetary Fund.

Second, NBU transactions in the Ukrainian FX market.

In May 2023, the NBU sold USD 1,962.9 million in the FX market and bought USD 63.3 million to replenish international reserves, according to balance sheet data. The NBU's net FX sales therefore increased to USD 1,899.6 million last month.

This increase came against the depletion of the seasonal factor (increasing FX sales by farmers for the sowing campaign), as well as difficulties in exports to neighbouring countries and through the grain corridor.

Meanwhile, inflows from international partners were much larger than the net FX sales by the NBU to cover the gap between supply and demand on the Ukrainian FX market.

And third, the revaluation of financial instruments (due to changes in their market value and exchange rate fluctuations).

The value of financial instruments decreased by USD 26.8 million in May due to revaluation.

"International reserves are now covering 4.9 months of future imports," the NBU added.