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NBU relaxes reserve requirements for domestic banks

NBU relaxes reserve requirements for domestic banks

27 November 2008

National Bank of Ukraine Deputy Head Anatoliy Shapovalov said yesterday that the NBU adopted a decision to relax reserve requirements for both foreign currency and hryvnya-denominated loans taken by Ukrainian banks, effective December 5. According to Shapovalov, for foreign currency loans, the NBU will now require banks to hold 3% of the amount for open-term deposits (from 4%) and 4% of the amount in fixed-term deposits (from 5%). For hryvnya-denominated loans, the NBU abolished the reserve requirements altogether, it previously stood at 0.5% for open-term deposits and 1.0% for fixed-term deposits. Andrii Parkhomenko: The regulation is capable of releasing up to USD 1 bln, and may thus improve liquidity on the foreign exchange market. However, this will not have a material impact on the UAH/USD rate, given an average monthly trading volume of USD 20 bln on the interbank FX market.

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