Ukraine’s international reserves fell by 8% in September
8 October 2024 10:11
The National Bank of Ukraine reported a significant reduction in the country’s international reserves in September 2024. According to official figures, as of 1 October, the reserves totalled USD 38,898.6 million, down 8.1% from the previous month, "Komersant Ukrainian" reports.
The main reasons for such a significant decline were large-scale foreign exchange interventions by the NBU and significant payments on external debts.
In particular, the National Bank was forced to sell USD 3,213.8 million on the foreign exchange market to stabilise the hryvnia exchange rate, while the repurchase of foreign currency amounted to only USD 0.6 million.
In addition, Ukraine made a number of important payments on its obligations. In particular, USD 729.8 million was paid to the International Monetary Fund, and USD 552.4 million was spent on servicing and repaying the public debt in foreign currency.
The situation was somewhat mitigated by the government’s revenues, which amounted to USD 674.7 million. Of this amount, USD 603.6 million came from the placement of foreign currency domestic government bonds, and the rest from international partners.
The NBU notes that the current volume of international reserves provides funding for 5 months of future imports.
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What are international reserves?
Ukraine’s international reserves are highly liquid assets in foreign currency and gold held by the National Bank of Ukraine. These reserves have two main functions: they are used to intervene in the foreign exchange market and to ensure that government payments can be made.
The NBU keeps these reserves in “safe havens” – with the most reputable foreign banks and in stable financial instruments. This is done to ensure maximum safety of these assets.
In managing international reserves, the NBU is guided by three main principles, arranged in order of priority:
- Security is the most important criterion that guarantees the safety of funds.
- Liquidity – the ability to quickly turn assets into cash.
- Profitability – earning a profit from the placement of funds.
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