Ukraine central bank approves ForEx forward operations
The Council of
the National Bank of Ukraine (NBU) has approved foreign exchange liberalization measures
that allow for forward banking operations, the NBU said in a June 16 press release. In
particular, the regulator extended forward operations to all foreign currencies from only
freely convertible currencies previously. It also lifted limitations on such operations
to within a year (365 days). Forward operations are now also allowed for legal entities
running import/export operations.
important step taken by the central bank, banks can buy/sell banking metals at the
interbank ForEx market under TOD, TOM, SPOT, forward, and SWAP conditions not only in
hryvnias, as previously, but also in foreign currencies. On the global markets, banks now
can run operations with banking metals not only with freely convertible currencies, but
with any currency.
Finally, the NBU
lifted limitations on non-cash ForEx operations for individuals. In particular,
individuals can convert currencies on their accounts within a day without any
limitations. Previously, they were allowed to convert only freely convertible currencies
once per day.
take effect June 26.
Paraschiy: These are very
important steps for the central bank. Forward operations are critical for replacing
restrictive measures at the ForEx, which are burdensome for businesses. At the moment,
exporters are obliged to return their proceeds within 180 days of delivery of products
and are requested to sell 50% of their foreign currency proceeds. These measures enable
the NBU to predict foreign currency flow and understand national currency exchange rate
the world, the forward market serves as an instrument for measuring ForEx tendencies and
hedging ForEx risks for players. As soon as the forward market is fully established in
Ukraine, the ForEx restrictions will have lost any relevance and the central bank has
taken the first step in this direction. Starting June 26, importers/exporters will start
hedging their foreign currency risks against the hryvnia. However, to make the forward
market totally functional, a market-maker is needed. So far, it’s not clear who could
take this role.
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