Ukraine’s international reserves grew by 10.6% in 2018, to $20.8 billion, and in December 2018 the growth was 17.5%, according to tentative data posted on the website of the National Bank of Ukraine (NBU). “It was possible to increase international reserves, primarily thanks to the external financing received by Ukraine and the purchase of excess currency in the interbank market by the NBU,” the NBU said in a statement.
As the central bank said, for most of 2018, the currency supply in the interbank market prevailed over demand.
In particular, in the first half of the year, a high level of supply was ensured by a favorable external pricing environment for Ukrainian exports and the revival of investor interest in emerging markets. In the second half of the year, a surplus of currency was recorded thanks to the export earnings for a record grain harvest and other agricultural products, the regulator said. At the same time, the NBU said that in 2018, the net purchase of currency in the interbank foreign exchange market by the NBU provided replenishment of reserves by $1.4 billion.
The insurance companies of Ukraine in January-September 2018 formed insurance reserves in the amount of UAH 24.8 billion, which is 15%, or UAH 3.2 billion, more than in the same period of 2017, member of the National Commission for the State Regulation of the Financial Services Market Oleksandr Zaletov has told Interfax-Ukraine. In his opinion, the growth of insurance reserves is associated both with the general increase in the volume of insurance services to the population and enterprises, as well as with the improvement of the actuarial valuation of insurance obligations.
As of September 30, 2018, current accounts and deposits in banks in the structure of placing insurance reserves accounted for 52.8% (UAH 13.1 billion), government domestic loan bonds for 28.6% (UAH 7.1 billion), rights of claim to non-resident reinsurers for 9.3% (UAH 2.3 billion), and real estate for 4.8% (UAH 1.2 billion).
According to Zaletov, a lack of offers from the stock market led to the fact that insurers’ investments in stocks and corporate bonds amounted to less than UAH 400 million, or a mere 1.5% of insurance reserves.
Ukraine’s forex reserves in May 2018 narrowed by 1.6%, reaching $18.12 million as of June 1, 2018, the National Bank of Ukraine (NBU) has published the preliminary data on its website. The central bank said that the reduction of the forex reserves is linked to payments on state debt. “Some $455.1 million was paid to the International Monetary Fund (IMF), $214.4 million to service and pay the government’s debt in foreign currency, including $126.2 million on government domestic loan bonds and $18.5 million on sovereign bonds,” the NBU said.
The main source of expanding the reserves in May was the purchase of foreign currency in the interbank market. According to the NBU, high prices for Ukrainian exports (metals, ore and grain) contributed to stable currency inflows, as well as an increase in the supply from banks, which the central bank expanded from the beginning of April to conduct its own operations with foreign currency on the interbank market.
In general, the National Bank in May bought out $181.2 million in the interbank market. All purchases were made in the form of interventions at the best rate.
In addition, last month, the reserves received $272.3 million and EUR 64.6 million from the placement of government domestic loan bonds denominated in foreign currency by the government.
The volume of reserves was also affected by the revaluation of financial tools (change in market value and the exchange rate of the hryvnia against foreign currencies) by $162.3 million.
In general, as of June 1, 2018, the volume of international reserves covers 3.2 months of future imports and it is sufficient to fulfill Ukraine’s obligations and current operations of the government and the National Bank.