The collapse of Ukraine’s reserves has slowed by five times

As a result of July, the National Bank sold $2,117 million in the foreign exchange market and bought $922 million in reserves.

As of August 1, Ukraine’s international reserves amounted to $22,385 million (equivalent), which is 2% less than at the beginning of July ($22,756 million). The National Bank announced this yesterday.

Compared to June ($2,300 million), the reserve drawdown rate slowed down more than five times. At the same time, since the beginning of the year, Ukraine’s reserves have fallen by 27.7% or $8,555 million.

As noted by the regulator, the NBU’s interventions and payments on the state’s domestic foreign exchange obligations are largely compensated by foreign currency loans in favor of the government.

The NBU sold $2,117 million in the foreign exchange market and bought $922 million in reserves. The balance of NBU interventions at the end of the month was negative and amounted to $1,195 million.

“The decrease in the net sale of foreign currency by the National Bank in July, compared to previous months, is mainly due to the adjustment of the official exchange rate of the hryvnia to the dollar from 9:00 on July 21, 2022 by 25% ( in level of UAH 36.57 per 1 dollar)”, the message said.

After the establishment of a new official exchange rate of the hryvnia against the US dollar, the net demand for non-cash transactions by customers decreased dramatically. Thus, from July 22 to the end of the month, the daily net supply was fixed in the interbank foreign exchange market in the amount of $40 million to $70 million a day.

“The decrease in the volume of emission financing to UAH 30 billion in July (from UAH 105.0 billion in June) also helped to reduce the pressure on international reserves,” the NBU noted.

Foreign exchange receipts in the accounts of the Government of Ukraine at the National Bank in July amounted to $1,563.2 million. In particular, $1,049.1 million came from the German government, and $514 million came from the placement of domestic foreign currency government bonds (OVGZ).

The total volume of government payments for the servicing and repayment of the public debt in foreign currency reached $677 million, including $630 million directed to the servicing and repayment of government bonds, and $47 million in settlements with other creditors.

In addition, provisions are affected by the revaluation of financial instruments due to changes in market value and exchange rates. Last month, their value dropped by $107.9 million.

Earlier, the National Bank announced when gold and foreign exchange reserves would return to pre-war levels. As you know, at the beginning of 2022, Ukraine’s reserves reached $30,941 million.

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