Ukraine foreign currency reserves slip to $37.9bn, central bank says

KYIV: Ukraine’s foreign currency reserves slipped to $37.9 billion at the start of July, the central bank said on Friday.

The reserves fell by 2.9% over the past month due to the central bank’s interventions to prop up the hryvnia currency and also due to government debt payments, the statement said.

The central bank said it sold about $2.99 billion on the foreign exchange market in June.

The Ukrainian economy has been hit hard by Russia’s invasion in February 2022 with exports, supply chains, and logistics disrupted, cities and infrastructure bombed, and millions of people fleeing the fighting.

During nearly 29 months of the war, the central bank has had to intervene in the foreign exchange market to meet the demand for hard currency and ease any sharp fluctuations in its currency.

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The hryvnia is now hovering at about 40.8 to the dollar.

Ukraine relies heavily on international financial aid from its Western partners to cover its budget gap and make social and humanitarian payments. The bulk of Ukraine’s state revenue is spent on defence.

In June the government received a new tranche of $2.02 billion from the European Union under its four-year Ukraine Facility lending program. It also raised $407.3 million from the placement of hard currency government treasuries.

Ukraine paid $444.5 million to service its foreign debts in June, including $315.7 million on hard currency-denominated state treasuries and 73.6 million to the World Bank. The government also paid $247.6 million to the International Monetary Fund, the central bank said.