Ukraine central bank eases foreign curency regulations

The National Bank of Ukraine (NBU) released a decree on March 24 that somewhat eases foreign currency regulations. It eased rules for early redemptions on foreign currency denominated debts for contracts that move the date of redemption by no more than 180 days. It also allowed for purchasing foreign currency for non-residents that owe money to Ukrainian banks. The funds can be used only for the need to recapitalize banks.

Alexander Paraschiy: These are minor changes that ease doing business for a small fraction of firms, but they show the direction that the NBU is moving. Previously on March 16, the NBU reported that its head, Valeria Gontareva, is considering the gradual liberalization of the ForEx market with debureaucratization as the first step, or the cancelation of dozens of burdensome regulations. Further steps would change the system from permission-based to risk-based. The liberalization moves will be conditional on the economy’s macro-economic health, she said.  The fact that the NBU is thinking about easing foreign currency clutches is positive; however, we do not see substantial liberalization to happen amid still complicated economic situation over the next six months.