Financial stability is at risk: why Ukraine’s foreign exchange reserves are shrinking
7 March 21:42
As of March 1, 2025, Ukraine’s international reserves amounted to USD 40.1 billion, down 6.7% from the previous month. This is reported by Komersant ukrainskyi with reference to the statistics of the National Bank of Ukraine (NBU).
Reasons for the reduction of reserves:
The NBU’sforeign exchange interventions. In February, the National Bank of Ukraine sold USD 3,022.6 million on the foreign exchange market and bought back only USD 0.5 million, resulting in net foreign exchange sales.
Debt repayments. The Government made payments totaling USD 341.6 million to service and repay the public debt in foreign currency, in particular
- uSD 428.9 million to the International Monetary Fund;
- uSD 275.3 million to the World Bank;
- uSD 54.1 million to other international creditors;
- uSD 12.2 million – on foreign currency domestic government bonds.
Proceeds from the placement of foreign currency domesticgovernment bonds. In February, the government’s foreign currency accounts with the NBU received USD 255.0 million from the placement of foreign currency domestic government bonds.
Revaluation of financial instruments. Changes in market values and exchange rates led to an increase in the value of financial instruments by USD 673.4 million.
Despite the reduction, the current volume of international reserves provides funding for 4.9 months of future imports, which is sufficient to maintain the stability of the foreign exchange market.
Earlier, the NBU predicted that Ukraine’s international reserves would amount to USD 40.5 billion by the end of 2025, and by the end of 2026 they could decline to USD 32 billion due to a reduction in international financial assistance and currency outflows from the private sector.
As of January 1, 2025, Ukraine’s international reserves amounted to USD 43.8 billion, which indicates a gradual decline in recent months.
