On 14 May 2013, the Board of the National Bank of Ukraine adopted Resolution No. 163 on Changing the Settlement Period under Export and Import Transactions and Imposition of a Mandatory Requirement to Sell Foreign Exchange Earnings (hereinafter referred to as Resolution No. № 163) and Resolution No. 164 on Establishing the Amount of Foreign Exchange Earnings subject to Mandatory Sale (hereinafter referred  to as Resolution No. 164).

The National Bank of Ukraine has passed the Resolutions within its terms of reference as specified by Article 387 of the Economic Code of Ukraine, Articles 7, 25, 44, 45, and 56 of the Law of Ukraine “On the National Bank of Ukraine”, Articles 1 and 2 of the Law of Ukraine "On the Procedure of Settlements in the Foreign Currency",   Chapters ІІ and ІІІ of Decree of the Cabinet of Ministers of Ukraine No. 15-93 of 19 February 1993 “On Foreign Exchange Regulation and Foreign Exchange Control System”. 

Pursuant to Resolution No. 163, the National Bank of Ukraine has introduced temporary measures that will be effective until 19 November 2013. In particular, it has:

changed the settlement period under export and import transactions, having shortened it from 180 calendar days to 90 calendar days;

imposed a mandatory requirement to sell foreign exchange revenues received by residents from sales of goods under external contracts.

imposed a mandatory requirement to sell foreign exchange earnings from abroad in favor of natural persons (residents and nonresidents) in an amount equal to or exceeding UAH 150,000.00 per month.

This requirement is applicable to any revenues in Russian Rubles and foreign currencies listed in the first group of the Foreign Currency and Banking Metals Classificator.

In accordance with Resolution No. 164, 50% of export revenues in foreign currency received by residents from sales of goods are subject to mandatory sale on the interbank foreign exchange market of Ukraine.

Speaking at a briefing held at the National Bank of Ukraine on 17 May 2013, Ms. Olena Shcherbakova, Director of General Department of Monetary Policy, pointed out the mandatory export revenue sales and a shortening of settlement period for performing payments under the export and import transactions that had been in effect for the past six months had proved to be efficient. On the one hand, they helped ensure that foreign exchange inflows kept coming at a regular pace. On the other hand, they did not hinder the normal functioning of market forces, as the market exchange rate was determined by the the market forces of supply and demand.

Together with other regulatory measures, it has created the conditions necessary to stabilize the foreign exchange market, improve market expectations, and enhance public confidence in the monetary unit of Ukraine.

In particular, Ms. Olena Shcherbakova emphasized that both cash and cashless segments of the foreign exchange markets had seen a reversal of the trend, with the net demand for foreign exchange gradually having translated into the net supply. "In April, the net supply of cashless foreign exchange amounted to USD 213 million, whereas in May – USD 127 million. On the cash segment of the foreign exchange market – USD 118 million and USD 100 million respectively,” said Ms. Olena Shcherbakova.

The aforementioned enabled the National Bank of Ukraine to preserve the forecasted dynamics of the exchange rate of hryvnia, while keeping the foreign exchange interventions to a minimum: in January – April 2013, transactions performed by the National Bank of Ukraine in the interbank foreign exchange market accounted for 1 % versus 3 % in 2012.

As a result, the amount of international reserves rose 3% in the first 4 months of 2013, while the Government and the National Bank of Ukraine were making hefty payments to repay external debts in a timely fashion. Public confidence in the national monetary unit has grown immensely: in January – April, deposits in the national currency have climbed by 16.3 %, whereas those in the foreign currency have declined by 0.2 %.

According to Ms. Olena Shcherbakova, stabilization of the foreign exchange market situation was instrumental in maintaining price stability, which is a top priority for the National Bank of Ukraine, and underpinning positive trends in the monetary sphere. Among the latter, one should mention the growth of bank deposit base accompanied by improvement of their maturity structure, a decrease in the dollarization level and the cost of resources, and a gradual revival of bank lending.

"Considering the above mentioned, the National Bank of Ukraine imposed a mandatory requirement to sell 50% of export revenues in foreign currency and shortened the settlement period for performing payments under the export and import transactions," emphasized Ms. Olena Shcherbakova. The National Bank of Ukraine hopes that the above measures will help reinforce already prevailing positive trends in the monetary sphere and boost the banking system's potential to withstand external shocks induced by instability in the global financial and commodity markets.