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This has never happened before: Ukraine's foreign exchange reserves hit a new absolute record

Kseniya KapustynskaLife
Ukraine's gold reserves set a record
Ukraine's gold reserves set a record

In July, Ukraine's international (foreign exchange) reserves increased by $2.71 billion to $41.7 billion, the highest level in the history of Ukraine's independence. For example, at the beginning of the full-scale war, on the morning of 24 February 2022, the foreign reserves stood at $27.42 billion.

This was reported by the National Bank of Ukraine (NBU). Before that, the highest level was recorded in June 2023. Before that, as of 1 May 2011, it was $38.3 billion.

"During July, international reserves continued to grow due to steady and rhythmic inflows from international partners, which exceeded the NBU's net sale of foreign currency and the country's debt payments in foreign currency," the NBU explained.

The current level of reserves covers 5.6 months of further exports. According to international standards, the level of 3 months of coverage is considered "normal".

What influenced the volume of foreign reserves in July

  • Foreign exchange earnings on the government's accounts totalled $4.68 billion in the month. Ukraine spent only $394.6 million on debt service.
  • NBU operations on the interbank market. The NBU sold $1.87 billion and bought back $12.9 million. Net sales of foreign currency amounted to $1.86bn.
  • Exchange rate. The valuation of financial instruments increased by $266 million.

"Receipts from international partners continued to be significantly higher than the volume of NBU interventions in the sale of foreign currency, which were carried out to cover the difference between supply and demand in the Ukrainian foreign exchange market," the National Bank explained.

As reported by OBOZREVATEL, the NBU cut the discount rate for the first time in a year - from 25 to 22%. A reduction in the discount rate means that money will become cheaper for banks. In the long run, this could lead to cheaper consumer loans.

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