Ukraine’s international reserves – Why the central bank accumulates reserves – NBU

International reserves The key is Macro Finance Ukraine’s stability The National Bank of Ukraine (NBU) supports a balanced policy of reserve accumulation, Ensure that the economy remains stable in the face of negative shocks.

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This is caused by National Association of Universities International reserves are a Airbags For the country’s financial stability, they help protect the economy from external shocks, Ensure foreign exchange market stability.

Protection against external shocks: International reserves enable a country to protect itself against unforeseen events, such as financial crises or price changes in world markets;

Stability of the foreign exchange market: For an open economy like Ukraine, it is vital to keep the foreign exchange market stable. Reserves help ensure this by maintaining liquidity in the banking system in times of crisis;

Investor Confidence: High levels of international reserves increase investor confidence in the country’s economic stability, which helps lower borrowing costs in international capital markets.

Some may argue that if reserves exceed the minimum required level, The central bank may ease monetary policy. However, during wartime, the importance of such reserves cannot be overestimated.

The war increases the risk of sudden capital flight and the likelihood of negative shocks. The sources of monetary inflows are shrinking and uncertainty fuels depreciation expectations. In this context, the central bank’s response to events plays a key role. Minimize negative impacts on the financial system and the economy as a whole.

National Bank of Ukraine pursues balanced policy Economical use of reserves, After all, the amount of international aid may gradually decrease, and some of the income has not yet been recognized. Therefore, the NBU strives to maintain Sufficient reserves, Ensure macro-financial stability, especially in the event of adverse developments.

As OBOZ.UA reported earlier, Ukraine’s international reserves (gold and foreign exchange) June 2024 – 2.9%up from $3.9 billion to $37.9 billion. This is the third consecutive month of decline after reaching a record high of $43.76 billion in March.

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