NBU to take further steps towards currency market liberalization

The National Bank of Ukraine (the NBU) is going to
open the way for the repatriation of 2017 dividends and lift some restrictions
on early repayment of external loans, the NBU website reported on Jan. 19,
citing a presentation by Serhiy Ponomarenko, the head of the open markets
department. These NBU steps are to be taken as part of a program of currency
market liberalization adopted in 2016.

The regulator’s decision should be taken upon the
examination of pertinent information on planned operations by commercial banks’
clients.

For the mid-term, the NBU is also considering
weakening restrictions of currency purchases on the interbank market, to lower
the requirement on business of the compulsory sale of 50% of foreign currency
proceeds and lessen the limits on currency purchase for banks’ own needs,
according to the presentation.

In 2017, the volume of repatriated dividends to
foreign investors was USD 1.8 bln.

Evgeniya Akhtyrko: The NBU’s
adherence to its currency liberalization program is a good signal to the market
and particularly foreign investors as it shows the regulator’s ability to
control the situation on the currency market while implementing inflation
targeting.

At the same time, a less-restricted currency market
puts additional pressure on the government  to secure the currency inflow
under the financial account given Ukraine’s chronic C/A deficit. In this
context, the call for a positive outcome of the current dilemma of Ukraine’s
cooperation with the IMF and other IFIs is only strengthened.