Ukraine’s foreign exchange reserves cut to $22.8B as of July 1

As of July 1, 2022, Ukraine’s foreign exchange reserves came to $22.8 billion, having reduced by 9% over the past month.

The relevant statement was made by the National Bank of Ukraine (NBU), an Ukrinform correspondent reports.

“As of July 1, 2022, according to the preliminary data, Ukraine’s foreign exchange reserves came to $22,756.9 million. In June 2022, they reduced by 9% in view of foreign currency sales in the interbank foreign exchange market. The intensification of international aid enabled Ukraine to partially compensate for relevant interventions,” the report states.

In June 2022, the NBU sold $3,987.3 million in the foreign exchange market and bought $31 million to replenish reserves. At the end of the month, the balance of interventions implemented by the NBU was negative, totaling $3,956.3 million.

The significant volume of currency sales from reserves was caused by the fact that the supply of foreign currency was lower than the demand. In particular, revenues from the export of goods and services and labor migrants were lower than the cost of defense, imports and settlements with international payment systems. The latter are carried out considering the expenses of national currency payment cards abroad.

An additional factor increasing the demand in the foreign exchange market is the monetization of budget deficit, implemented by the NBU. Most of hryvnia financing received by the Government gradually entered the foreign exchange market, increasing the demand for foreign currency.

In June 2022, the foreign currency inflows into the NBU accounts of the Government of Ukraine came to $2,763.0 million. In particular, a total of $967.4 million was received from the World Bank, $779.0 million – from the Government of Canada, $479.4 million – from the Japan International Cooperation Agency, $354.2 million – from the placement of foreign currency domestic government bonds.

Meanwhile, the total amount of public debt service payments in foreign currency reached $833.6 million. A total of $672.1 million was transferred to service and repay domestic government bonds, $70.1 million to service external government loans, and the rest of sum to settle accounts with other creditors. In addition, the NBU transferred $166.2 million to the International Monetary Fund (IMF).

Also, the revaluation of financial instruments was carried out due to changes in the market value and exchange rate. Last month their cost reduced by $152.2 million.

A reminder that, as of June 1, 2022, Ukraine’s foreign exchange reserves reached $25.1 billion.

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