Ukrainian Ruble Reserves Set to Rise, Central Bank Adviser Says

Ukraine will increase the share of Russian rubles in central bank reserves and may use them to finance imports, Valeriy Lytvytskyi, adviser to the central bank governor, told reporters today.

The country may use rubles to pay for natural gas delivered in October, Ukraine’s Energy and Coal Minister Yuriy Boyko said on Nov. 2.

Ukraine wants to reduce the cost it pays for Russian gas to balance the finances of state-owned NAK Naftogaz Ukrainy and reduce the budget deficit. Failed price talks with Russia may mean higher domestic bills for energy and utility services, pushing the country to draw on the third tranche of the International Monetary Fund’s $15.6 billion loan.

The country secured the IMF loan in 2010 and has so far received a total of $3.4 billion in two tranches.

The central bank sees international reserves at the end of the year at about the same level as December 2010’s $34.6 billion, Lytvytskyi said.

Although the ruble isn’t a fully convertible currency, “there are no obstacles to add ruble into our reserves,” Olena Shcherbakova, the head of monetary policy department, said today.

The central bank has recently bought Swiss francs to its foreign reserves, Lytvytskyi said.

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