On November 15, 2013, Resolution of the National Bank of Ukraine Board No. 453 dated November 14, 2013, "On Changing the Terms for Settlements on Transactions of the Exports and Imports of Goods and Introducing the Mandatory Sale of the Proceeds in Foreign Currency" (hereinafter – Resolution No. 453) was registered with the Ministry of Justice of Ukraine. Resolution No. 453 comes into effect on November 20, 2013.

Pursuant to this Resolution, as a temporary measure that will remain in effect until May 17, 2013, the National Bank of Ukraine has:

shortened the settlement terms under export/import transactions from 180 calendar days to 90 calendar days;

introduced the requirement for the mandatory sale in the interbank foreign exchange market of Ukraine of foreign exchange proceeds from overseas received by legal entities that are not authorized banks, sole proprietors, foreign missions (except for diplomatic missions and consular offices) and credited to the accounts opened with the authorized banks to engage in joint activities without establishing a legal entity, as well as foreign exchange proceeds credited to residents' accounts opened outside Ukraine on the basis of individual licenses granted by the National Bank of Ukraine.

The requirement for the mandatory sale of 50% ^[1] of foreign currency proceeds applies to proceeds in the foreign currency of the first group of the Classifier of Foreign Currencies and Banking Metals^[2] and Russian rubles.

In accordance with Resolution No. 453, foreign exchange proceeds earned by the state or received under sovereign guarantees; proceeds from loans and credits obtained under the international agreements of Ukraine; proceeds arising from international technical assistance projects (programs); proceeds received by resident intermediaries that have to be transferred to the funds’ owners; or proceeds that have been erroneously transferred are not subject to the mandatory sale in the interbank foreign exchange market of Ukraine.

In addition, Resolution No. 453 envisages that the incomings from the outside of Ukraine in the foreign currency in favor of natural persons in the amount that equals or exceeds the equivalent of UAH 150,000 per month are subject to the mandatory sale in the interbank foreign exchange market of Ukraine.

"The gains from the imposition of the mandatory sale of foreign exchange proceeds by the National Bank of Ukraine and the shortening of the terms of cross-border settlements have proved the efficiency of these instruments. The implementation of these measures has resulted in a slowdown in the average daily net demand for foreign exchange and ensured smooth inflows of foreign exchange into the interbank foreign exchange market. At the same time, the National Bank of Ukraine managed to maintain the overall equilibrium in the interbank foreign exchange market and ensure its predictable dynamics. This has enabled the National Bank of Ukraine to scale back its transactions in the interbank foreign exchange market and keep its interventions to sell foreign exchange to a minimum," said Deputy Director of the Monetary Policy Methodology Department Liudmyla Chepinoha.

According to her, given the above and taking into account the ongoing uncertainty in the international financial markets, challenging external economic environment and stemming from the need to maintain the equilibrium in the interbank foreign exchange market as one of the preconditions for ensuring price stability in the country, the National Bank of Ukraine Board has adopted Resolutions No. 453 and No. 457.

“Coupled with other measures taken by the National Bank of Ukraine, these resolutions ensure stability of the foreign exchange market and price stability, improve market expectations and help decrease the level of dollarization of the Ukrainian economy," added Deputy Director of the Monetary Policy Methodology Department Liudmyla Chepinoha.

[1] In accordance with Resolution of the National Bank of Ukraine Board No. 457 dated November 15, 2013 "On Setting the Size of Mandatory Sale of the Incomings in Foreign Currency"].

[2] Approved by Resolution of the National Bank of Ukraine Board No. 34 dated February 4, 1998 [in wording of Resolution of the National Bank of Ukraine Board No. 378 dated October 2, 2002, registered with the Ministry of Justice of Ukraine on October 24, 2002, under No. 841/7129 (amended)].