The National Bank of Ukraine has clarified the restrictions on cross-border transactions of citizens to prevent unproductive capital outflows from the country under martial law.
From now on, individuals will be able to use their own foreign currency to purchase a monthly equivalent of up to UAH 100,000 in assets that are directly converted into (exchanged for) cash through transactions classified as quasi cash. The respective limit also applies to cross-border P2P transfers.
The NBU allows the abovementioned cashless transactions with payment cards that were issued for the accounts opened in foreign currency. As previously reported, the quasi cash transactions include the replenishment of e-wallets and brokerage or forex accounts, the cashing of traveler’s checks, purchases of virtual assets, and more.
At the same time, in order to support the forcibly displaced Ukrainians, the NBU has determined that individuals can also make cross-border P2P transfers of up to UAH 100,000 per month from bank accounts opened in domestic currency. However, the NBU has temporarily prohibited the quasi cash transactions from the respective accounts.
The NBU estimates that said changes will improve conditions on the FX market, which is a prerequisite for further easing the restrictions and relieving pressure on Ukraine’s international reserves.
As of March 2022, demand and supply in the export and import customer transactions in the FX market have been largely balanced. Simultaneously, the banks’ large-scale FX purchase transactions to make settlements with international payment systems have created additional pressure in the FX market. In particular, net foreign currency transfers made by Ukrainian banks to international payment systems were USD 1.7 billion in March, and USD 0.9 billion in early April (as of April 18).
On the one hand, Ukrainians need to make settlements with international payment systems using hryvnia cards issued by Ukrainian banks to purchase goods and services abroad. At the same time, such settlements are critical for millions of Ukrainians who were forced to temporarily flee the country.
On the other hand, payment cards are also used to pay for quasi cash transactions largely made to circumvent the existing NBU restrictions, including for foreign investment purposes, which is prohibited under martial law. Thus, the respective transactions shall be deemed as causing nonproductive outflows of capital from the country. As a result, the NBU has introduced partial restrictions on such transactions.
Please note that these changes do not apply to the use of payment cards abroad and in Ukraine to pay for goods, works, and services that can be made without restrictions.
The changes noted above were approved by NBU Board Resolution No. 78 On Amendments to NBU Board Resolution No. 18 dated 24 February 2022 dated 20 March 2022 (UKR). The document came into effect on 20 April 2022.