NBU relaxes reserve requirements for domestic banks

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.