Gold and foreign exchange reserves of Ukraine: statistics and structure

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The structure of gold and foreign exchange reserves of each country includes gold and currency. Other assets are often included as well. In developed countries, the structure of gold reserves may include the British pound and the Swiss franc, the yen and other major currencies of the world. The policy of the Central Bank determines the composition of the reserve. Moreover, the more stable the economy of the state, the greater the percentage of gold in its gold reserves. If the exchange rate of the national currency is not very stable, then the state reserve will have a significant reserve of the strongest foreign currencies.

Structure of gold reserves by country

The structure of the gold reserves is fundamentally different depending on the state. The latest official data as of January 1, 2014 indicate the following share of gold in assets:

• America - 70%.
• Germany - 66%.
• France - 64.9%.
• EU countries – 55.2% on average.
• Russia – 7.8%.
• Ukraine - 8%.

Here, we note that in the past three years, a decrease in the cost of the precious metal has been recorded. That is why the relevance of gold as a dominant asset is being questioned by many. If the countrydeveloping, it is more rational to fill the reserve with the main currencies of the world, since their rate is growing very quickly. Developed issuing states that issue world currencies prefer precisely precious metals when forming gold reserves. In addition to metal and currency, gold reserves may include special drawing rights and IMF state quotas.

Reserve of Ukraine in 2014

Gold and foreign exchange reserves of Ukraine in 2014, according to published data, corresponded to the equivalent of 16.2 billion dollars. The reason for the increase in the budget was the stand-by program from the International Monetary Fund. The IMF allocated $978.42 million to the government. 397.55 million dollars were received on the account of the national bank of the country. The dynamics was due to the country's obligations to make payments to repay the debt in foreign currency. During the month, the National Bank actively manipulated money on the international currency market. He carried out both the sale of currency in the amount of 833.74 million, and its purchase for 98.30 million. This format of actions was aimed at smoothing the exchange rate of the national currency.

Reduction of gold reserves in 2015

Ukraine's gold and foreign exchange reserves, despite an unexpected growth in autumn 2014, fell by $7.5 billion in December. According to official data, by January 1, 2015, the volume of international reserves was 7.533 billion. To assess the state of the reserve, you can study the same indicator last year.

So, in December 2014, the amount of gold reserves inequivalent to the dollar was 9, 965, 95 billion. In percentage terms, state assets decreased by 24.41% in just a year. Foreign currency reserves decreased from $9 billion 959.95 million to $6 billion 618.37 million. Ukraine's gold and foreign exchange reserves have not lost their borrowing rights, which, as they amounted to 3.78 million dollars, still do today. There was a slight increase in dollar assets from 903.84 million in equivalent to 911.09 million. The state's reserve position in the IMF remained at $0.03 million.

What does the government say?

According to the authorized bodies, such a reduction is due to the timely and full repayment of the debt of the government and the NBU in foreign currency. UNIAN reported that gold reserves decreased by 51.19% ($10.450 billion) by the beginning of 2015.

The results of November are not very comforting, as Ukraine's gold and foreign exchange reserves, statistics on which have always been within the normal range, already in November easily updated their lows over the past 10 years. The last “thinning” of assets of this level was recorded in December 2004 at around $9.715 billion. The National Bank justifies the situation by paying payments from NJSC Naftogaz of Ukraine for imported gas. Moreover, the government's foreign currency debt is systematically serviced and repaid, including to the IMF.

A significant contribution to the situation was made by hryvnia interventions on the interbank market. Ukraine's gold and foreign exchange reserves begandecline in 2013. In that period, they sank by 16.83% or by 4.130 billion dollars. Valeria Gontareva's forecast for a dramatic increase in gold reserves in 2015 has been a complete failure.

Consequences of the reduction of gold reserves

Ukrainian gold and foreign exchange reserves, the schedule of which has been falling over the past few years, negatively affects the economy of the state as a whole. Reducing the backbone of the domestic economy deprives confidence and creates panic in society.

Deviation from the reserve replenishment schedule also occurred as a result of unscheduled parliamentary elections. Strict adherence to the plan could radically change the actual situation. The state reserve of Ukraine in the volume in which it is today, according to authorized persons, is not a global problem. It is encouraging that the IMF itself actively supports the position that the country's assets will be equal to $23 billion. The state itself is considering an indicator of $15 billion.

What's going on today?

At the moment, Ukraine's gold and foreign exchange reserves have declined catastrophically, if you do not take into account the upcoming tranche from the EU and the IMF. The exchange rate of the national currency is gradually declining, the public debt does not stop growing. At the same time, we can confidently say that hyperinflation and default on government debt will not take place.

The stoppage of publications of statistics from the analytical group Da Vinci AG speaks about the unpleasant situation in the country. Company withIn 2010, it prepared a quarterly forecast for gold reserves, but in the second half of 2014, it completely abandoned its idea due to an extremely negative forecast. The situation, according to most experts, is connected with the negative dynamics of the last 6 years in the field of industrial exports.

When did the downtrend start?

Ukraine's 2014 gold and foreign exchange reserves are much lower than planned. According to experts, the trend towards the reduction of assets was laid back in 2011. It is indirectly linked to military operations in the Donbass. The events unfolding in the east of the country acted as a catalyst for the current situation, which would have manifested itself by 2017-2018 anyway.

Ukraine's gold reserve showed dynamics similar to the positions of Ukrainian exports on the world market in the period from 2000 to 2014. Only in the field of metallurgy, foreign sales from 2007 to 2013 decreased by at least 25%. At the same time, prices sank by about 30%. Consumers from Europe and Asia have significantly reduced orders. In parallel, the MENA states began to actively increase their capacity.

Falling gold reserves: probable causes

Ukraine's foreign exchange reserves actually collapsed, but not only due to the economic situation in the world, but also as a result of a reduction in production and sales on the international market. The reason for the phenomenon is directly related to the fixed exchange rate of the national currency, the lack of reforms in the economy, the continuation of the policy of betting on economic resources with a parallelreducing their weight in the global economy. An identical situation is developing in the chemical industry and in the field of mechanical engineering.

Reduction of reserves is a natural phenomenon. The aggravation of the crisis in 2014 simply coincided with the secession of Crimea and the fighting in the east of the country. The negative situation in the country as a whole left its mark on the gold and foreign exchange reserves of Ukraine. October 2014 was only a natural decline after the rise of 2008-2009, when the state's economy flourished due to active external financial assistance.

What could make a difference?

The situation in Ukraine, including a sharp and systematic reduction in gold reserves, requires prompt response and intervention by the NBU. It is necessary to stabilize the situation in many commercial financial organizations, including through the introduction of temporary administrations. Certain situations require the recognition of official bankruptcy, without attempts to correct the situation through financial expenses. Consolidation of the financial market is the most optimal scenario for the development of events, which requires the withdrawal of small financial institutions without a large customer base from the domestic market. It should be noted that the National Bank does not have strong levers of influence in the field of exchange rate formation. Actions at the level of the Cabinet of Ministers and the National Bank to attract foreign investment and stimulate the development of exports are more than vital.

What can be judged by Ukraine's gold reserves?

The stock of gold reserves of Ukraine testifies to the stockfinancial strength of the state. Only the NBU has the right to replenish and spend funds from the reserve. The main purpose of assets is to eliminate the financial deficit in the balance of payments solely for the purpose of implementing interventions. Assets are necessary for carrying out investment activities within the foreign exchange market in order to influence the national exchange rate. The gold and foreign exchange reserve can be called the financial safety margin of national money, using which the state is able not only to strengthen the national currency, but also to stabilize it.

The fall in reserves clearly indicates that the NBU is actively spending highly liquid assets in an attempt to support the hryvnia exchange rate on the international market. The decrease in inventories can be called an alarming trend, indicating the weakness of the currency. The reduction in the stock indicates a high probability of an increase in the dollar and the euro, since the state simply will not be able to support the national money rate. This is fraught with the complete depletion of the gold and foreign exchange reserves and the default of the economy. Despite positive forecasts, no actual increase in gold reserves is foreseen.