Ukraine’s gross international reserves (GIR) fell by 1% to $28.5bn due to redemption of debt obligations, the National Bank of Ukraine (NBU) reported on March 5 as cited by Unian.

The fall was due to the repayment of both international and domestic debt obligations, the regulator said, but the reduction was mitigated by strong inflows into the domestic OVDP bond market.

"FX inflows to the government amounting to $456.7mn came from a placement of domestic government debt securities. At the same time, the government spent an equivalent of $633.9mn on servicing and repayment of FX public debt. That includes the $489.2mn that went towards the servicing and repayment of T-bills & bonds, and the $33.7mn that was spent on the servicing of Eurobonds. The rest of the funds went to meet the government’s other FX commitments," the NBU said as cited by Unian.

In addition, the government and the NBU in February repaid an equivalent of $213.1mn to the International Monetary Fund (IMF).

The NBU's interbank forex market transactions have also influenced foreign reserves, the regulator notes: "At the beginning of February, the FX supply exceeded demand on account of non-residents increasing the T-bills and bonds portfolio. During this period, the NBU bought $200mn to replenish international reserves. In the last two weeks of February, the FX market was balanced, and so the central bank did not intervene. The central bank did not intervene to sell foreign currency in February."  Another factor of influence was revaluation of financial instruments (due to changes in their market value and exchange rate fluctuations). Last month, the NBU says, the value of these instruments decreased by $87.5mn (in the equivalent).

International reserves are sufficient to cover 4.6 months of future imports – well above the three months economists consider is the minimum necessary to ensure the stability of the currency.

As of the end of 2020, Ukraine's international reserves grew by 15%, amounting to $29.1bn in the equivalent as of January 1, 2021.