Ukraine central bank softens ForEx rules

The National Bank of Ukraine (NBU) took one more step towards softening administrative restrictions at the ForEx market on Sept. 14. In particular, the NBU eased the limit on foreign currency withdrawals from bank accounts to the equivalent of UAH 250,000 per day from UAH 100,000 previously. 

Also, the regulators allowed purchasing foreign currency for external debt servicing even if an entity has its own foreign currency in accounts. Such purchased foreign cash should be used only for specified purposes (such as repayment of interests).

In its Sept. 14 decree, the NBU also prolonged for three months its requirement for exporters to sell at least 65% of foreign currency proceeds (lowered in June from 75%) and kept the time for export proceeds return to 120 days (increased from 90 days in late July). It also prolonged its June rule on repatriation of dividends adopted in June  (only dividends for 2014-2015 ae allowed to be repatriated, with monthly limits of USD 1-5 mln, depending on the total size of dividends subject to repatriation).

Alexander Paraschiy: The recent ForEx liberalization steps are rather minor, especially in light of growing foreign currency deposits and the relatively silent individual cash market. Still, it might be seen as a positive signal amid recent volatility at the ForEx.

Remarkably, NBU Head Valeria Gonateva at a meeting with representatives of Ukraine’s 40 largest banks on Sept. 12 stated publicly that there will be no serious ForEx liberalization steps until the rules for profit moving abroad will be properly regulated.  

Against this backdrop, we expect the regulator to keep monitoring tendencies at the ForEx with only tiny administrative easing possible.