Ukraine’s central bank selling reserves to stabilize national currency as threat of Russian invasion looms

27 January 2022, 11:24 PM

The National Bank of Ukraine (NBU) has sold $1.068 billion from reserves on the interbank forex market since early 2022, to support Ukraine’s national currency, the hryvnia, which is depreciating due to geopolitical risks, the Ukraine’s central bank wrote in a statement on Facebook on Jan. 26.

Ukraine’s national currency has been devaluing since November amid a massive Russian military buildup along the borders of Ukraine and a looming threat of a further invasion.

This week alone, the NBU has already sold $336.3 million of foreign reserves. Since the start of 2022, the hryvnia has devalued by 5.1%, the central bank said.

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In January 2022, the Ukrainian public bought currency worth a total of $165 million, against $224 million in March 2020, when the financial system was affected by quarantine restrictions due to COVID-19.

On Jan. 25, the hryvnia forex rate against the dollar hit a four-year low.

On Jan. 26, the hryvnia rate on the interbank forex market weakened to UAH 28.815 per $1, from UAH 28.72 per $1 on the previous business day.

Last week, the NBU stated that there was no panic in the forex market, and “aggressive purchases” of currency were due to non-residents withdrawing from domestic government bonds.

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