[Ukraine's Central Bank: Sharp Decline in International Reserves, but Still Sufficient to Cover Import Demand for the Next 5.4 Months]

On June 6th, the National Bank of Ukraine (NBU) explained the reasons behind the sharp decline in Ukraine's international reserves and stated that the current scale of international reserves can cover import demand for the next 5.4 months. Despite the reduction, gold and foreign exchange reserves are still higher than at the beginning of the year.

The NBU said that Ukraine's international reserves decreased by 4.6% in May. As of June 1st, they dropped to $44.5 billion. This change was mainly due to central bank foreign exchange interventions and repayment of foreign currency debt. "These expenditures were partially offset by funds from international partners and issuance of foreign currency government bonds. Despite the reduction in reserves, the current scale is still higher than at the beginning of the year and is sufficient to maintain stability in the foreign exchange market."

Reserve fluctuations are influenced by multiple factors, including:

- The central bank's operations in the local foreign exchange market (net sold $2.962 billion in May, while repurchased only $130,000).

- Government inflows and outflows of foreign exchange (received $1.357 billion in aid funds from the EU and other international partners in May, along with income from government bond issuance).

- Repayment of government foreign debt (paid $31.01 million in debt and $29.63 million to the IMF).

The NBU emphasized that "the current reserve scale can meet the import demand for 5.4 months."

As of May 1st, Ukraine's international reserves were $46.7 billion, having increased by 10.2% in April. The NBU stated that this increase was due to the arrival of international aid funds and a record low scale of net foreign exchange sales.

Gold and foreign exchange reserves are high-liquidity foreign currency and gold assets held by the central bank for fulfilling international payment obligations and regulating exchange rates. They are stored in top-tier international banks and secure financial instruments, serving as an important indicator of national economic stability.

Source: https://www.toutiao.com/article/1834185790759948/

Disclaimer: The article solely represents the author's viewpoint.