Ukraine central bank moves toward foreign curency liberalization

The National Bank of Ukraine (NBU) decided on May 5 to soften some temporary foreign currency restrictions. In particular, the NBU canceled the compulsory foreign currency sale for proceeds wired as foreign investment in Ukraine. On the top of that, the NBU reduced the number of days needed to verify foreign currency purchase requests. Starting May 11, importers will need to wait only three days to purchase foreign cash instead of four days previously (or the T+2 rule instead of the previous T+3 rule).

Alexander Paraschiy: The stabilized ForEx market gave the green light for some minor liberalization moves. The NBU is in the process of developing a long-term strategy of ForEx liberalization and is taking the first minor steps to ease regulation clutches without introducing any risks to the achieved stability. The steps announced on May 5 are largely symbolic as the NBU will keep control “at the entry points,” ultimately having the final say on whether to allow importers to purchase foreign currency.  In regards to investment prospects, the compulsory sale rule was not very troubling since companies were nonetheless able to decide for themselves when to wire funds into the country. We regard these minor steps as encouraging signals that the NBU wants to send to the market and the business community.