Five liberalization measures for foreign exchange controls

29.03.18 Aktuell

The NBU expands the ability of banks to conduct their own currency transactions on the interbank market

Taking into account the favorable situation on the currency market, the National Bank considers it possible to continue to mitigate temporary administrative restrictions for banks, the relaxation of which does not create risks for market destabilization.

1. The NBU expands the ability of banks to conduct their own currency transactions on the interbank market

As of March 30 this year, the requirement regarding the size of the authorized balance of sale and purchase by banks of foreign currencies and bank metals within one operational day will be ceased. In addition, retaliation for its violation will be canceled.

According to the Board of the National Bank, this decision will give banks the opportunity to trade the currency on the interbank market more actively during the day and manage its currency liquidity more effectively. As a result, the volume of trading and liquidity in the interbank market should increase. Due to this, the National Bank will be able to reduce the presence in the foreign exchange market, and the market will be able to seek balance independently and more effectively.

2. The National Bank has changed the limits of the open currency position for banks

As of May 1 this year, the limit of the general long open currency position of the bank will be increased from 1% to 3%, the limit of the general short open currency position of the bank will be reduced from 10% to 8%. This will allow the banks to distribute currency risks more effectively.

3. The National Bank continues relaxation of restrictions on early repayment by Ukrainian companies of external credits and loans in foreign currency

This will be possible if a foreign person, one of whose shareholders is a foreign state or a foreign bank with a shareholder foreign state, is engaged in the implementation.

4. The National Bank continues to expand the list of business operations that are not subject to the mandatory sale requirement

A resident company should not sell credit or loan funds, if a foreign person, one of whose shareholders is a foreign state, is engaged in the implementation. This applies only to cases where the specified foreign state has an official rating not lower than A category ( according to Fitch Ratings, Standard&Poor’s, Moody’s).


5. The National Bank has made it easier for businesses to transfer foreign currency abroad to make payments related to litigation

Resident-debtors will be able to transfer currency beyond the bounds of Ukraine to execute court decisions without limitations on the amount. The foreign state referred to in this case must belong to countries with an official rating not lower than category A ( according to Fitch Ratings, Standard&Poor’s, Moody’s).
 
The relevant changes were approved by the NBU Board Resolution № 31 as of 29 March 2018, "On Amendments to Certain Regulatory Acts of the National Bank of Ukraine" and the Decision of the Board № 184-rsh as of 29 March 2018 "On Establishing Limits of the Bank's Open Currency Position".