The National Bank of Ukraine presses ahead with measures to gradually ease administrative restrictions on FX operations in the money and FX markets. NBU Board Resolution No. 140, dated 3 March 2016, On Resolving the Situation in the Monetary and Foreign Exchange Markets of Ukraine has been issued to this effect.  

The NBU will ease those administrative restrictions that will not undermine the stability of the money and FX markets. The rationale behind this decision is that appropriate prerequisites are in place. These include the gradual recovery of confidence in the banking sector, which is evidenced by the increase in household deposits in domestic currency that have long been on an upward trend. Additionally, the NBU Board took into account positive signs  that have emerged. For example, households tend to sell more foreign currency to banks than they purchase from banks. Furthermore, the demand from banks for government bonds denominated in foreign currency suggests the availability of FX liquidity in the banking sector.  This move has been backed by the Financial Stability Board.

In view of the above, the NBU has increased the amount of FX cash or investment metals that banks’ customers are allowed to withdraw from their accounts per day from an equivalent of UAH 20,000 to UAH 50,000. The regulator has also raised the amount of domestic currency cash that banks’ customers are allowed to withdraw from their accounts per day from an equivalent of UAH 300,000 to UAH 500,000. Such a move is bound to contribute to the recovery of confidence in the banking sector and encourage  inflows of deposits in domestic and foreign currency into banks.

Additionally, the maximum amount of FX cash that banks are allowed to sell to an individual per day has been increased from an equivalent of UAH 3,000 to UAH 6,000. This move is intended to bring the FX cash market  out of shadow.

At the same time, the NBU keeps in place those administrative restrictions that are necessary to preserve the positive trends in the money and FX markets and prevent capital outflows abroad. In particular, the regulator has keeps in place the surrender requirement obliging legal entities to surrender (sell) 75% of their export proceeds and the 90-day rule for settlements for export/import of goods, and extends a ban on early repayment of loans by resident borrowers under foreign currency loan agreements between a resident borrower and a non-resident lender and others.

The resolution shall come into effect from 5 March 2016 and remain in effect through 8 June 2016. However, regardless of the validity period of the aforementioned resolutions, the National Bank is set to move ahead with plans to liberalize the foreign exchange regulation in a gradual manner if foreign exchange market conditions and the economic situation are favorable.