In this paper we searched for the most important determinants of reserve holdings inUkraineusing quarterly data from 2000 to 2013 years. We evaluated their importance using two econometric techniques: autoregressive distributed lag (ARDL) approach and Vector Error Correction model (VECM) approach. We find that the ratio of imports to GDP, the ratio of broad money to GDP, ratio of net foreign direct investment to GDP, the ratio of short term debt to GDP and GDP determine Ukraine’s long-run reserves demand function. Our empirical results show that shocks associated with the financial account is more dangerous for the Ukrainian economy than current account shocks. The low speed of adjustment coefficient of error correction model suggests that National Bank ofUkrainehas to carry out more active reserve management policy. Results denied the precautionary motive of reserves accumulation over the long term.