Ukraine's reserves reach 8-year high

The NBU’s gold and foreign exchange reserves (FX reserves) reached $29.3 billion, while the net gold and foreign exchange reserves minus the debt to the International Monetary Fund amount to $18.1 billion.

"In 2020, Ukraine's international reserves rose by 15% and amounted to an equivalent of $ 29.133 billion as of January 1, 2021. This amount of reserves is a record over the past 8 years (the last time that FX reserves exceeded the above-mentioned level was in September 2012)," the NBU reports. Thus, at year-end, FX reserves rose by $3.8 billion, the net purchase from this volume amounted to more than $1 billion.

"The increase in international reserves in 2020 was also driven by the revaluation of financial instruments (due to changes in their market value and exchange rate fluctuations). These rose in value by USD 2.3 billion," it was reported.

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It is noted that in December 2020, Ukraine’s FX reserves were up by almost $3 billion. This was due to the significant FX inflows to the government (massive placement of domestic government bonds—The Page), and the NBU’s net FX purchases in the interbank FX market.

Repayments on public and publicly guaranteed debt came in at an equivalent of $10.4 billion. This was almost identical to the FX inflows received by the government ($10.3 billion).

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Currently, international reserves could pay for 4.8 months of future projected imports. This is sufficient for Ukraine to meet its commitments and for the government and the NBU to conduct their current operations.

Recall that in mid-December 2020, FX reserves rose to $26.8 billion amid the strengthening of the hryvnia.

The historical maximum of the FX reserves was reached in August 2008—$38 billion. The historical minimum of the FX reserves was recorded during the military operation in the Debaltsevo region and the Second Minsk Agreement signing (early 2015). At that time, the FX reserves were about $5 billion.

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