Ukraine central bank prolongs foreign currency restrictions

The National Bank of Ukraine (NBU) prolonged on Dec. 4 several foreign currency restrictions for three months, it reported on its website. In particular, the NBU extended the compulsory sale of 75% of export proceeds and a 90-day requirement for returning export revenue to Ukraine. At the same time, the NBU relaxed some restrictions on foreign currency operations. In particular, the compulsory sale does not apply to foreign currency loans from the state export-import agency. Also the compulsory sale is not required for non-resident deposits on tendering procedures under public procurements. The NBU also lifted a ban on foreign currency purchases for investors that sold state bonds.

Alexander Paraschiy: The extended restrictions were no surprise in light of the hryvnia’s renewed weakening. The NBU will extend the compulsory sale until substantial capital inflow starts and ForEx hedge instruments are employed. Until then, we can expect only minor spot corrections and, probably, a reduction in the percentage of compulsory foreign currency sales.