Ukraine expands foreign currency sale requirement

The National Bank of Ukraine (NBU) expanded its 50% foreign currency sale requirement to include all revenue of legal entities and private entrepreneurs from abroad, the regulator stated in its resolution on October 11. The NBU first introduced a mandatory 50% foreign currency sale requirement – on exporters only – in November 2012.

Alexander Paraschiy: The announcement indicates the government is resorting to harsher measures to maintain control of the ForEx market. The November 2012 regulation hasn’t been enough to balance the market. In September, the NBU spent USD 582 mln on interventions at the ForEx, trying to prevent the hryvnia from falling below 8.2 UAH/USD. While the interventions were three times less than in September 2012, they indicated that pressure on the national currency remains. And the main challenge for the national currency’s stability is still ahead with USD 1.6 bln to be returned to the IMF by November 12 and energy imports to increase further. Against this backdrop the NBU expanded its 50% foreign currency sale requirement beyond exporters to all other legal entities and private entrepreneurs. We see this tightening step as quite predictable and expect even tougher regulatory measures to be introduced in the upcoming months.