Event: Ukraine’s balance of payments (BoP) surplus reached $2.8 bln in June, the highest level since 2005, Interfax reported yesterday (26 July) with the reference to the National Bank of Ukraine (NBU). The current account added $195 mln, and direct foreign investments rose to $755 mln. The current account surplus for 1H2010 totaled $472 mln compared to a deficit of $835 mln in 1H2009.

Impact: The news is neutral for Ukraine.

Rationale: We regard this news as neutral for Ukraine’s economy as a positive BoP was achieved largely thanks to the loan attracted from Russia’s VTB Bank ($2 bln) to finance the budget deficit. A surplus in the current account has now been recorded for a third month in a row ($239 mln in April and $263 mln in May). The positive current account will result in further growth of foreign reserves, which totaled $29.5 bln as of June 1, 2010, the NBU reported.

Tags: Macro