Bloomberg News

Ukraine Current-Account Gap Widens, Adding Hryvnia Pressure

October 24, 2011

(Updates with September data from second paragraph, analyst’s quote in fourth.)

Oct. 24 (Bloomberg) -- Ukraine’s current-account deficit widened in the third quarter from the same period a year ago as imports outpaced exports, adding pressure on the hryvnia.

The shortfall reached $2.6 billion, the highest level since the final three months of 2008, compared with $980 million in the third quarter last year, the Kiev-based Natsionalnyi Bank Ukrainy said in a statement on its website today. The deficit in September grew to $1.02 billion from $957 million in August.

A widening current-account deficit is threatening the hryvnia, which lost 0.4 percent versus the dollar since the start of 2011. The currency declined 37.3 percent against the dollar in 2008, when the current-account gap reached a record of $12.8 billion, according to central bank data.

“The September current-account deficit came in worse than we expected, mainly because steel exports weakened even though prices were still strong” said Olena Bilan, chief economist at Kiev-based Dragon Capital, adding that it will downgrade their full-year forecast. “The fourth quarter will remain difficult. An upsurge of grain exports on the cancellation of export tariffs will help offset a continuing decline in steel exports, but unless Ukraine negotiates lower gas prices with Russia, we don’t see drivers that could improve the situation.”

Ukraine posted a $1 billion financial-account deficit, the first gap this year, the central bank said, adding that it had to spend reserves to cover the shortfalls. The country’s international reserves fell to $34.95 billion at the end of September from $38.2 billion a month earlier.

The deficit rose to $5.5 billion in the first nine months of the year as imports of goods jumped 44.1 percent, while exports rose 38 percent, the bank said. The gap was $506 million in the same period a year ago.

Ukraine’s foreign direct investments were $2.1 billion in the third quarter, the bank said.

--With assistance from Kateryna Choursina in Kiev and Harumi Ichikura in London. Editors: Alan Crosby, Eddie Buckle

To contact the reporter on this story: Daryna Krasnolutska in Kiev at

To contact the editor responsible for this story: Balazs Penz at;

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