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FX reserves of Ukraine reach 8-year high in 2020

posted onJanuary 19, 2021
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In 2020, Ukraine’s international reserves rose by 15%, to an equivalent of USD 29.1 billion, an eight-year high, according to the National Bank of Ukraine (NBU).

The last time that international reserves exceeded this level was in September 2012, NBU said. This level is in line with what the NBU projected in its October 2020 Inflation Review.

The NBU managed to increase international reserves by a total USD 3.8 billion in a year marked by a crisis. The NBU’s net FX purchases exceeded USD 1 billion for the year despite the fact that the central bank in March 2020 generated USD 2.2 billion in net FX sales to smooth out exchange rate fluctuations that weakened the hryvnia during the introduction of mobility restrictions.

At the same time, repayments on public and publicly guaranteed debt came in at an equivalent of USD 10.4 billion. This was almost identical to the FX inflows received by the government (USD 10.3 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, the bank said.

Ukraine FX reserves

In December 2020, Ukraine’s international reserves were up by almost USD 3 billion. This was due to the significant FX inflows to the government, and the NBU’s net FX purchases in the interbank FX market. 

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

"The net forex reserves of the NBU [excluding the debt to the IMF] as of January 1, 2021 amounted to USD 18.1billion and are sufficient to cover payments by the public sector and the National Bank on external debt to non-residents, which in 2021 will amount to about USD 7.2billion," Head of the Council of the NBU Bohdan Danylyshyn said on Facebook as cited by Interfax Ukraine on Jan.12.

The volume of planned payments in favor of the IMF this year is about USD 1.6 billion.