Ukraine central bank makes extra efforts on easing FCY restrictions

The Council of the National Bank of Ukraine (NBU) approved on Feb. 22 further foreign currency rules liberalization. In particular, the regulator eased currency rules for cases related to compliance on procurement procedures. For instance, there is no need to sell foreign currency if one makes a deposit guarantee to comply with procurement requirements. This foreign currency also will not be considered if the company participating in the procurement applies for a foreign currency purchase.  On the top of that, the NBU eased the requirements for foreign currency purchases of import operations. In particular, an importer can apply for a foreign currency purchase if there is no more than USD 100,000 on its account, as opposed to USD 25,000 previously.

Alexander Paraschiy: We are traditionally positive even about such minor steps.  The last time we observed a ForEx easing measure was in November of last year.  New efforts to lift restrictions mean that the NBU feels confident about ForEx tendencies and does not see considerable risks for hryvnia volatility over the very near future.

The NBU has large liberalization efforts in its plans. A general concept of liberalization was already developed and the regulator reports that the draft law is already under development. Still, a large-scale liberalization with the lifting of major restrictions (like compulsory foreign currency sale) is not on the agenda since the NBU is expected to accumulate stronger gross reserves. As of today, only USD 3.3 bln (out of USD 15.4 bln) in gross international reserves are own funds while the rest (USD 12.2 bln) are funds that should be returned to the IMF.